Chinese firms barred from distribution operator sale

Conflict of interest, including in grid energy storage, a fast-growing market, has prompted power utility PPC to stop two Chinese firms interested in the prospective sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a PPC subsidiary, from taking part.

State Grid Corporation of China (SGCC), a strategic partner of Greek power grid operator IPTO with a 24 percent stake, and another Chinese company, still undisclosed, both participated in a market test for the DEDDIE/HEDNO privatization, indicating an interest to submit bids.

A total of 19 firms reportedly expressed preliminary interest in the sale’s market test, conducted by the procedure’s consultants.

The DEDDIE/HEDNO partial privatization’s conditions include a term barring the participation of any firms directly or indirectly related to IPTO.

The conflict-of-interest term was included in the sale’s rules as electricity network companies, whether involved in high voltage, such as IPTO, or mid and low voltage, such as DEDDIE/HEDNO, are expected to find themselves competing in various electricity market services, including energy storage.

The grid energy storage market – offering large-scale storage systems that store electrical energy during times of abundance, low prices, or low demand before returning it to the grid when demand is high and electricity prices tend to be higher – is experiencing rapid growth on a global scale.

Greece still lacks a legal framework covering this domain. The energy ministry is working on this pending issue, crucial for the country’s effort to achieve National Energy and Climate Plan objectives through greater RES penetration.

This legal framework will, amongst other matters, determine market participation and remuneration terms for energy storage units, as well as related services to be traded on the energy exchange.

PPC anticipates first-round expressions of interest from four to six consortiums for the DEDDIE/HEDNO sale of a 49 percent stake.

 

DEDDIE sale preliminary deadline near, China’s SGCC out of contention

Prominent US funds such as Blackrock and KKR, European funds, including Ardian, as well as distribution network operators, primarily from Europe’s south, and central Europe, are among 19 likely participants, to date, in power utility PPC’s sale of a 49 percent stake in subsidiary DEDDIE/HEDNO, the distribution network operator.

An approaching expression-of-interest deadline set by PPC expires on January 29. In the lead-up, some 70 possible investors have been approached by three consultants, Goldman Sachs, Eurobank and Grant Thornton, commissioned by the power utility for the DEDDIE/HEDNO sale.

State Grid Corporation of China (SGCC) cannot take part in the sale as its strategic partnership with Greek power grid operator IPTO, in which the Chinese company holds a 24 percent stake, would represent a breach of conflicting-interest rules.

SGCC recently made clear an interest to further develop its presence in the Greek electricity market by either increasing its IPTO stake or pursuing a share in DEDDIE.

RAE awaits Brussels response to Ariadne minority sale plan

RAE, the Regulatory Authority of Energy, is awaiting a response from the European Commission before approving a plan by power grid operator IPTO to sell up to a 40 percent stake in its subsidiary Ariadne Interconnection, established specifically for the development of the Crete-Athens interconnection.

RAE has consulted Brussels as the authority wants clarification on what the corporate structure of parent company IPTO and its subsidiary permits, based on EU law.

The Crete-Athens grid link was originally planned as a segment of EuroAsia, a wider interconnection plan of PCI status to link the Greek, Cypriot and Israeli electricity grids, with EuroAsia, a consortium of Cypriot interests, at the helm. Eventually, IPTO withdrew the Crete-Athens section for its development as a national project.

Ariadne Interconnection’s role will be strictly limited to the construction of the Crete-Athens interconnection, a concession agreement between IPTO and its subsidiary Ariadne Interconnection has specified. Once completed, IPTO will assume the project’s management.

Last October, IPTO forwarded a detailed plan to RAE concerning the sale of a minority stake in Ariadne Interconnection.

China’s SGCC, a strategic partner of IPTO holding a 24 percent stake, informed, some time ago, that it would be interested in acquiring a 20 percent stake of Ariadne Interconnection. European operators such as Italy’s Terna and Belgium’s Elia, as well as major investment groups, have also expressed interest.

The acquisition by investors of a minority stake in Ariadne Interconnection is linked to the development of major-scale RES projects on Crete.

IPTO awaiting approval of 20% Ariadne sale for €40m minimum

Power grid operator IPTO’s needed approval from RAE, the Regulatory Authority for Energy, of its sale plan offering a 20 percent stake in subsidiary firm Ariadne Interconnection, tasked with the development of the Crete-Athens grid interconnection, is now in the hands of the authority, sources informed.

A condition setting a minimum sale price of 40 million euros, or 20 percent of the nominal value of Ariadne’s equity capital, totaling 200 million euros, has been included in the plan, the sources added.

It also includes criteria that will need to be met by prospective bidders, as well as the tender’s steps all the way to the final round, when qualifiers will be given access to the sale’s video data room.

The VDR will offer candidates financial, technical and legal details concerning the Crete-Athens grid interconnection, a project budgeted at one billion euros and slated for completion within 2023.

IPTO has already secured a 400 million-euro loan from Eurobank, an additional 200 million euros will stem from own capital, while the other 40 percent is expected to be provided in the form of EU subsidies, now close to approval.

China’s SGCC, IPTO’s strategic partner with a 24 percent stake, as well as European operators, among them Italy’s Terna and Belgium’s Elia, have all expressed interest ahead of the Ariadne Interconnection tender.

Importantly, IPTO is still awaiting RAE’s approval of WACC levels for the Cretan interconnection project – permitted revenue (2018-2021) and required revenue (2019-2021).

Projects categorized as projects of major significance are legally entitled to additional returns beyond the asset-based yield.

IPTO’s Ariadne Interconnection minority share offer resurfaces

Power grid operator IPTO has reopened the prospect of making available to investors a minority stake in its subsidiary Ariadne Interconnection, established for the development of the Crete-Athens interconnection.

The possible sale essentially remained stagnant during a recent period of administrative changes at RAE, the Regulatory Authority for Energy.

Ariadne Interconnection has been commissioned the project’s construction IPTO but will cease to be involved in any way once the project is delivered to the operator for operation.

IPTO’s administration reminded RAE, in a letter forwarded just days ago, about a concession agreement it has signed with Ariadne Interconnection, offering a detailed description of the relations between the two companies for the Crete-Athens grid interconnection project.

The project was originally planned to be a segment of a wider interconnection plan to link the Greek, Cypriot and Israeli electricity grids, with EuroAsia, a consortium of Cypriot interests, at the helm, before IPTO withdrew the Crete-Athens section for its development as a national project.

IPTO has noted a minority partner in Ariadne Interconnection could be offered a stake of up to 40 percent.

China’s SGCC, a strategic partner of IPTO holding a 24 percent stake, informed, some time ago, that it wants to acquire a 20 percent stake of Ariadne Interconnection. European operators such as Belgium’s Elia and France’s RTE, as well as major investment groups have also indicated they would be interested.

 

Remaining energy utility sales, DEDDIE and IPTO, nearing

The time is nearing for Greece’s two remaining energy utility  privatizations, those of electricity distribution network operator DEDDIE/HEDNO and power grid operator IPTO.

An energy ministry official yesterday updated journalists on the progress of both sales at a presentation of gas distributor DEDA’s five-year investment plan.

All details concerning the sale of a 49 percent stake in DEDDIE/HEDNO, a fully owned power utility PPC subsidiary, will be ready and finalized in September, enabling the announcement of a tender that month, according to the ministry official.

Preparations for this sale include the evaluation and transfer of assets used by DEDDIE/HEDNO from PPC to the operator.

As for the IPTO sale, talks between the operator and China’s SGCC – already holding a 24 percent stake in IPTO and first-offer rights in the event of the sale of a further stake in the operator – are still at an early stage.

The energy ministry is moving carefully in an effort to comply with fine details of EU directives concerning the entry of non-EU members into European enterprises and infrastructure.

IPTO, Ariadne agreement details partnership for Crete link

Power grid operator IPTO has signed a concession agreement with its fully owned subsidiary Ariadne Interconnection detailing their relationship for the Athens-Crete grid interconnection project, energypress sources have informed.

The agreement was prepared with assistance from legal and consulting firms to overcome concerns raised by RAE, the Regulatory Authority for Energy, following a decision by Greek authorities to develop this interconnection as a national project and not as part of the wider EuroAsia project planned to link the Greek, Cypriot and Israeli power grids.

RAE will now assess the concession agreement’s details and make observations, if needed, before procedures commence to bring investors into Ariadne Interconnection for a minority share.

The details of this entry procedure still remain unclear but the energy minister is expected to clarify through related legislation.

One of the ambiguities concerns whether large-scale RES projects on islands will be able to reserve IPTO interconnection capacities.

The Copelouzos group and Terna, for instance, maintain investment plans for Crete. If given the green light by the energy ministry, they will reserve capacities for the Athens-Crete interconnection, provide funds accordingly and be given corresponding stakes in Ariadne Interconnection.

Investors are expected to acquire up to 40 percent of Ariadne Interconnection, according to the IPTO board.

Chinese company SGCC, IPTO’s strategic partner with a 24 percent, has already expressed an interest to acquire a 20 percent stake in Ariadne Interconnection. Other interested parties include European operators, among them Belgium’s Elia and France’s RTE, as well as prominent financial groups possessing major investment portfolios.

Ministry, responding to Syriza MPs, lists reasons for further sale of IPTO

A government decision to further privatize power grid operator IPTO is linked to the EU’s objective for carbon neutrality by 2050 as well as a national decarbonization target by 2028, efforts requiring big investments for greater emphasis on new and innovative technologies and systems; an upgrade of existing networks as smart networks; as well as the development of new business models, the energy ministry has noted in response to recent questioning, in Greek Parliament, by MPs of the main opposition leftist Syriza party.

Also, swift development of electricity transmission networks promises to significantly contribute to a speedy recovery of the pandemic-hit national economy, the ministry noted.

In addition, the sale of an additional stake in IPTO is a pre-election pledge made by the New Democracy party, the ministry response reminded. ND was elected into power one year ago.

IPTO’s initial privatization, shaped and carried out by the previous Syriza government, is unusual as the Greek State may have maintained a majority 51 percent stake but its powers for strategic decision-making are limited and require the approval of the minority partner, China’s SGCC, holding a 24 percent stake, the energy ministry pointed out.

SGCC has been given the right to block strategic decisions at IPTO and priority rights in any further privatization of the power grid operator.

Government moving to replace entire IPTO Holding board

The government intends to soon replace all five board members of listed IPTO Holding, its representative in power grid operator IPTO with a controlling 51 percent stake. IPTO was ownership unbundled three years ago.

The energy ministry is expected to propose, as replacements, five new officials on July 16, when IPTO Holding is scheduled to hold its annual general shareholders’ meeting, energypress sources have informed.

A shareholders’ decision on a new five-member IPTO Holding board is one of eight issues on the upcoming meeting’s agenda.

The term of the current board, comprising Iason Rousopoulos, the chief executive, Giannis Kabouris, its deputy, and board members Alexandros Nikolouzos, Konstantinos Karakatsanis and Evaggelos Darousos, expires on December 11 this year.

The existing board has asked shareholders to submit resumes of candidates they wish to propose for the new board no later than 48 hours prior to the July 16 meeting.

The IPTO Holding board change is not expected to impact – at least initially – work proceedings at power grid operator IPTO. Rousopoulos and Kabouris, IPTO Holdings’ chief and deputy, respectively, are also members of the IPTO power grid operator board.

DES ADMIE, the IPTO public holding company, holds a 25 percent share of IPTO and China’s SGCC the other 24 percent.

IPTO’s chief executive Manos Manousakis, who has the faith of the energy ministry and the Chinese shareholder, is expected to remain at his post, despite the changes at IPTO Holding, and orchestrate the sale of a further stake in IPTO. SGCC maintains priority rights in any prospective IPTO privatization procedure.

 

 

Flight reconnections, geopolitics key for IPTO sale rescheduling

Rescheduling details of a privatization plan for the sale of an additional stake in power grid operator IPTO will depend on the restart of the Athens-Beijing flight route, the reestablishment of face-to-face contacts blocked by the pandemic, as well as a reduction in geopolitical tension between China and the west.

IPTO’s strategic partner State Grid Corporation of China (SGCC), holding a 24 percent stake in the Greek operator, has expressed interest to boost this share. The Chinese company maintains first-offer rights in the event of a further sale.

Skillful diplomacy will clearly be needed to overcome any EU and US objections to an increased SGCC share in IPTO. Video conferences would prove insufficient. Greek foreign ministry officials will need to make at least one trip to China for related talks.

Greek governmnent officials intend to travel to Beijing for work on various matters following the summer, sources informed energypress. Bilateral issues have accumulated during the several months of lockdown. Many cancelled meetings need to be rescheduled.

More crucially, in the lead-up, the Greek side will need to prepare for these Beijng meetings by working through related matters with officials in Brussels and Washington.

Sale of further stake in IPTO delayed by pandemic’s impact

A privatization procedure for the sale of an additional stake in power grid operator IPTO will not be able to resume for at least another two to three months as a result of the coronavirus pandemic’s negative impact on international markets, highly ranked energy ministry officials have told energypress. The ministry will wait for conditions to recover, the sources noted.

A legislative revision is needed to lift a restriction imposed by the country’s previous leftist Syriza government in 2016 not permitting the Greek State’s stake in IPTO to fall below 51 percent, the current stake held by the Greek State.

Though an amendment ending this restriction has been included in a draft bill covering environmental and RES matters, now headed to parliamentary committees for discussion ahead of ratification, considerable road lies ahead before the sale of a further stake in IPTO can take place.

IPTO’s strategic partner State Grid Corporation of China (SGCC), holding a 24 percent stake in the Greek operator, has expressed interest to boost this share. The Chinese company maintains first-offer rights in the event of a further sale.

Following his election victory last July, Prime Minister Kyriakos Mitsotakis, leader of the conservative New Democracy party, had announced a further stake of IPTO would be sold.

An official visit to Athens by Chinese president Xi Jinping last November added further impetus to the plan and earlier this year, deputy energy minister Gerassimos Thomas was planning to visit China for related talks.

However, talks between Athens and Beijing have remained stalled as a result of the pandemic.

 

IPTO, Ariadne roles for Crete link project clarified to avoid complications

Power grid operator IPTO, guided by consultants and legal experts, has prepared a concession agreement clarifying the roles of the operator and its subsidiary firm Ariadne Interconnection in the development of the Athens-Crete electricity grid interconnection. This is needed to avoid future complications in Brussels.

The concession agreement makes clear Ariadne Interconnection’s involvement in the venture is limited to the development stage, noting the subsidiary firm will not maintain any operational or management interests once the project is delivered to IPTO for operation.

RAE, the Regulatory Authority for Energy, has warned that any managerial involvement in the project by a company such as Ariadne Interconnection, not a certified operator like its parent company, will lead to complications at the European Commission and could delay the project, to be developed as a national project, not a PCI project promising EU funds.

RAE’s concerns are made more acute by the prospect of Ariadne Interconnection’s prospective split from IPTO as part of a procedure to offer a minority stake to third parties. Ariadne Interconnection is currently a fully-owned IPTO subsidiary.

Clarification on the project roles of IPTO and Ariadne Interconnection will enable Ariadne Interconnection to seek minority shareholders.

IPTO has noted a 40 percent stake of Ariadne Interconnection will be offered to investors to help finance the project without the burden of bank loans.

State Grid Corporation of China (SGCC), IPTO’s strategic partner with a 24 percent stake, has expressed an interest to acquire a 20 percent stake in Ariadne Interconnection.

IPTO, DEPA Trade, DEPA Infrastucture sales put on hold

Energy-sector privatizations planned for launch in the second quarter, as well as sales already in progress, are being put on hold as a result of the coronavirus pandemic’s impact on the global economy and the plans of the government and privatization fund TAIPED.

Two thirds of Greece’s privatization program this year concerns energy utilities, as energy minister Costis Hatzidakis has noted.

The freeze on plans includes the sale of an additional stake of power grid operator IPTO, which was planned for the second quarter.

State Grid Corp of China (SGCC), already holding a 24 percent share of IPTO and possessing first-offer rights, has expressed an interest to boost its stake.

However, IPTO and SGCC officials have not been able to meet for talks as a result of the extreme conditions. Greece’s deputy energy minister Gerassimos Thomas had planned a trip to China one-and-a-half months ago but was unable to travel as a result of a travel ban imposed by the Chinese government following the coronavirus outbreak in China early this year.

Two privatization procedures for gas utility DEPA’s new entities, DEPA Trade and DEPA Infrastructure, both of which have drawn considerable interest, have also been put on hold.

The DEPA Trade sale attracted nine bidding teams, domestic and international, for its first round, a turnout interpreted as a vote of confidence for the Greek economy. The sale’s first-round expressions of interest could be appraised in the summer.

Additional IPTO stake seen offered within next three months

The government, gearing up for a series of energy sector privatizations, plans to hasten the sale of an additional yet unspecified stake in power grid operator IPTO. The procedure could now be launched within the next three months.

Investor interest in IPTO has risen as the operator’s asset value is projected to increase sharply over the next decade.

The Greek State currently controls a 51 percent share of IPTO, directly and indirectly. Late in 2019, State Grid Corp of China (SGCC), the buyer of a 24 percent stake in IPTO and holder of priority rights should any additional stake be offered, expressed an interest to boost its stake in the operator and also acquire a 20 percent stake in subsidiary firm Ariadne Interconnector, project promoter of the Crete-Athens electricity grid interconnection, a project budgeted at one billion euros.

The size of the additional IPTO stake to be placed for sale remains unclear, but, without a doubt, SGCC’s decision on whether or not to exercise its priority right will be influential.

Italy’s Terna, holding a 30 percent stake in CDP Reti, an Italian holding company, is also believed to be interested in the upcoming IPTO sale. SGCC would also be involved here as the Chinese company holds a 35 percent stake in CDP Reti. French operator RTE and a variety of funds are also considered believed to be considering the IPTO sale.

IPTO’s assets are seen rising from a present level of 1.5 billion euros to five billion euros over the next ten years as a result of the development of major grid interconnection projects to link the country’s Dodecanese and North Aegean Islands with the mainland.

Greece’s energy-sector privatizations will not be limited to gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Trade, both underway, nor will there be a gap until the next sale, distribution network operator DEDDIE/HEDNO, scheduled for September, energy ministry officials have informed. The Hellenic Petroleum ELPE sale will be deferred.

 

IPTO, ministry, RAE seeking common ground for Ariadne tender

Officials at power grid operator IPTO, the energy ministry and RAE, the Regulatory Authority for Energy, are seeking common ground that would pave the way

a tender to offer a minority 39 percent share in IPTO subsidiary Ariadne Interconnector, an SPV established for the development of the Athens-Crete electricity grid interconnection.

IPTO is looking to attract an investor, or investors, for a minority stake in Ariadne as financial support for the costly project.

IPTO wants to maintain a majority stake in its subsidiary as the operator is determined to control the construction of a project it will eventually operate.

State Grid Corp of China (SGCC), holding a 24 percent stake of IPTO, is expected to participate in the tender. The Chinese company has already expressed interest for a 20 percent stake in Ariadne and has signed a related memorandum with IPTO.

If SGCC’s interest is limited to a 20 percent stake, then a second equity package carrying a further 19 percent is likely to be offered to other investors.

EuroAsia Interconnector, a consortium of Cypriot interests heading a wider PCI-classified project planned to link the Greek, Cypriot and Israeli grids, was expected to acquire a 39 percent in Ariadne. However, a dispute with IPTO over control of the wider project’s Crete-Athens section has distanced EuroAsia.

Energy minister Costis Hatzidakis and IPTO chief executive Manos Manousakis are both confident concerns raised by RAE over the tender’s procedure will be overcome and enable a launch of the competition within the first months of this year.

RAE is worried about complications that could arise and trouble the tender as a result of SGCC’s stake in IPTO. If not handled appropriately, the tender could spark protests from rival bidders claiming unfair competition, RAE fears. Also, the authority is well aware of Brussels’ sensitivity to the prospect of a wider Chinese presence in EU infrastructure.

 

Ariadne Interconnector minority stake tender early in 2020

A tender to offer one or two prospective partners minority stakes in Ariade Interconnector, the SPV established by power grid operator IPTO for the development of the Athens-Crete electricity grid interconnection, is expected to be staged within the first few months of 2020.

Both the energy minister Costis Hatzidakis and IPTO chief executive Manos Manousakis anticipate common ground will soon be found with RAE, the Regulatory Authority for Energy, to enable the tender to go ahead.

State Grid Corp of China (SGCC) appears willing to participate in the tender. The Chinese company, already holding a 24 percent stake of IPTO, has expressed interest to acquire 20 percent of Ariadne. A related memorandum guaranteeing SGCC’s involvement, has been signed between SGCC and IPTO.

If SGCC’s interest in Ariadne is limited to 20 percent, then a second package, most probably offering an additional 19 percent, will be offered to investors for a total of 39 percent.

This is the Ariadne Interconnector stake that had been planned for EuroAsia, a consortium of Cypriot interests that has opposed IPTO’s decision to appoint Ariadne, a subsidiary firm, as project promoter of the Athens-Crete electricity grid interconnection.

Euroasia, heading a consortium formed for a wider PCI-status interconnection project to link the Greek, Cypriot and Israeli grids, has sought control of the Crete-Athens segment’s development.

If SGCC expresses an interest for an Ariadne stake bigger than 20 percent, then just one package offering 39 percent will be offered through a tender.

IPTO is determined to keep a majority stake in its subsidiary Ariadne as the operator wants to maintain control over the construction stage of the Athens-Crete link, to be managed by the operator once launched.

Investors, especially from abroad, are expected to show strong interest in Ariadne.

The IPTO administration is also looking to offer minority stakes to investors in other projects it is developing. This would secure further financing support and swifter completion.

Ministry dismisses SGCC hiring, pay relaxation request for IPTO

Energy ministry officials have reacted negatively to a request from State Grid International Development, a member of the corporate group State Grid Corporation of China (SGCC), for a relaxation of bailout-related recruitment and remuneration terms at power grid operator IPTO, in which the Chinese company is a strategic partner with a 24 percent stake.

An energy-sector draft bill delivered by the ministry includes a plan to relax hiring and remuneration restrictions at power utility PPC and distribution network operator DEDDIE/HEDNO, a subsidiary.

These restrictions, resulting from a bailout term imposed on Greek public utilities, increase the Chinese investor’s risk and affect IPTO’s growth prospects, State Grid International Development has complained in a letter received this week by energy minister Costis Hatzidakis and other government officials.

The IPTO investment will be bleak if the Chinese company cannot select and remunerate staff under its own terms, in accordance with its interests, the letter noted.

The Chinese request will not be met, energy ministry officials told energypress, clarifying that a recent decision enabling a relaxation of hiring and payment terms concerns PPC as this utility faces treacherous financial conditions and needs to overcome competitive issues for survival.

 

SGCC wants relaxation of bailout hiring limits at IPTO

State Grid International Development, a member of the corporate group State Grid Corporation of China (SGCC), has sent a clear message to the Greek government calling for a relaxation of recruitment terms at power grid operator IPTO, in which the Chinese company is a strategic partner with a 24 percent stake, noting current hiring restrictions, resulting from a related bailout term imposed on public utilities, increase this investment’s risk and affect its growth prospects.

The Chinese investor wants IPTO included in a draft bill relaxing recruitment terms for the power utility PPC and distribution network operator DEDDIE/HEDNO.

The request was expressed through a letter signed by State Grid International Development chief official Hu Yuhai and received by Energy Minister Costis Hatzidakis, his deputy Gerassimos Thomas, as well as Interior Minister Takis Theodorikakos, according to energypress sources.

The issue had been brought to the attention of the previous Greek government several months before its legislative election defeat in July, the Chinese investor reiterated.

“We consider the situation incomprehensible and somewhat unreasonable when a company the size of IPTO, with support from the strategic investor, is not given the opportunity to select and remunerate its staff in accordance with its rules, serving its interests,” the Chinese firm noted in its letter.

SGCC’s investment and IPTO’s growth prospects will be placed under a state of uncertainty if the Greek power grid operator is not included in the revisions planned for PPC and DEDDIE/HEDNO, the Chinese investor warned, promising fair and transparent recruitment procedures if the restrictions are lifted.

 

SGCC interest in extra IPTO stake, 20% of Crete grid link SPV now official

State Grid Corp of China (SGCC) chairman Wei Kou has officially expressed an interest by the company to boost its 24 percent share of Greek power grid operator IPTO at a meeting with energy minister Costis Hatzidakis, ministry sources have informed.

The SGCC proposal will now be examined by the government, planning to offer a further stake of IPTO to investors.

SGCC holds preferential rights for the sale of any additional IPTO stake, according to a  shareholders’ agreement signed in 2017 for the Chinese company’s acquisition of a 24 percent stake.

The SGCC head official also confirmed his company’s interest to acquire a 20 percent stake in Ariadne, an IPTO subsidiary established as a special purpose vehicle for the development of the Crete-Athens electricity grid interconnection.

China Energy in 4 Copelouzos Group wind energy projects

Domestic investment partnerships between the Copelouzos Group and China Energy Investment for four wind energy parks – in Thrace, Trikorfo (Karystos area, Evia), Mani and Crete – have been included in a catalog of agreements signed by officials yesterday as part of a visit to Greece by China’s President Xi Jinping, heading a Chinese business delegation.

The four wind energy parks are part of a strategic partnership signed in July, 2018 by the Chinese company and the Copelouzos Group for China Energy Investment’s entry, as a shareholder, in the Greek group’s portfolio of wind energy projects, totaling 1,500 MW.

China Energy holds a 75 percent stake in the Thrace wind energy park, already operating. Development of the Copelouzos Group’s three other wind energy projects is expected to gain momentum following the signing of yesterday’s agreements.

Other projects included in the Greek-Chinese catalogue, a list of six projects – energy related and not – include an intention by State Grid Corp of China (SGCC) to build on its 24 percent stake of Greek power grid operator IPTO; a waste incineration project on Rhodes; and expansion work at Piraeus port.

China Energy was established in November, 2017 through a merger between China Guodian Corporation and the Shenhua Group, launching its operations with an equity value of just over 17 billion euros, total assets of 235.6 billion euros, 66 subsidiaries and a workforce numbering 350,000.

The company, heavily dependent on coal but taking major steps in the renewable energy domain, was ranked 101st on the Fortune Global 500 list for 2018.

Chinese officials to table widespread energy investment interest

Chinese investors are looking to, more or less, cover the Greek energy sector’s entire gamut.

Talks during a two-day visit, today and tomorrow, by a Chinese delegation headed by China’s President President Xi Jinping, are expected to cover energy cooperation in the installation of smart power meters and fiber optics to networks, investments in natural gas-fueled power stations, energy storage, as well as joint ventures for solar, wind and biomass energy projects.

This widespread Chinese investment interest, more or less covering the sector’s entire gamut, also includes financial support as well as the sale of all types of technology needed.

The interest of Chinese investors was made clear to power utility PPC chief executive Giorgos Stassis on a trip to China a week ago.

Talks between officials will include interest by State Grid Corp of China (SGCC) to build on its 24 percent stake of Greek power grid operator IPTO and enter the equity make-up of the operator’s subsidiary Ariadne, project promoter of the Crete-Athens electricity grid link.

Joint investments with PPC and other players in the renewable energy domain will also be explored.

HEDNO/DEDDIE’s plan for the installation of smart power meters is another topic of interest for the visiting Chinese investors.

The next chapter of preceding talks with PPC officials for the development of gas-fired power stations is also expected.

Fuel shift alternatives of the power utility PPC’s prospective Ptolemaida V power station, originally planned as a coal generator, will also be tabled.

Just days ago, PPC officials, led by Stassis, the CEO, held a range of meetings at the Shanghai International Import Expo 2019 with China Development Bank, Shanghai Electric and China Three Gorges, holding a stake in Portugal’s EDP Renovaveis.

China Intellectual Electric Power (solar), ZTE (telecommunications) and CHINT (smart power meters) are among other companies also believed to be seeking to secure investments in the Greek market, sources informed.

SGCC interested in additional IPTO stake, Crete grid link role

The chief official at State Grid Corp of China (SGCC) is expected to officially express interest for an additional stake in Greek power grid operator IPTO as well as an entry into its subsidiary Ariadne, project promoter of the planned Crete-Athens electricity grid interconnection.

Wei Kou, the SGCC chairman, is scheduled to hold a meeting with Greek energy minister Costis Hatzidakis in Athens today.

The Chinese official is part of a visiting Chinese delegation spearheaded by President Xi Jinping. The group arrived yesterday.

The energy ministry has known about SGCC’s interest in both matters for quite some time now.

In July, Hatzidakis, the energy minister, had announced a government intention to further privatize IPTO. SGCC already holds a 24 percent share.

Ensuing reports on the additional IPTO stake that could be offered by the Greek government have ranged between 20 and 30 percent.

As for the Crete-Athens grid link, needed to resolve a looming energy shortage threat on the island, SGCC’s right to become involved is unclear. The European Commission needs to clarify whether the subsidiary of a certified operator – in this case, Ariadne – can develop national grid projects if third parties have entered as shareholders.

Quite clearly, the Greek government is keen on further energy sector collaborations with China. Athens, however, will need to move with particular care and abide by stricter EU rules concerning Chinese investments in European sectors of strategic importance.

Major Greek energy companies represented for PM’s China trip

The country’s energy sector is well represented in a business delegation accompanying Prime Minister Kyriakos Mitsotakis’ current official visit to China.

Greek energy corporations primarily active in electricity, renewable energy and energy project construction are represented by highly ranked officials.

Power utility PPC, represented by chief executive Giorgos Stassis; and top officials from Mytilineos group, the Copelouzos group, GEK Terna and the Panagakos group have joined the Greek Prime Minister for the China trip.

A significant energy-sector agreement has already been established by the two countries. In 2017, SGCC, the State Grid Corporation of China, acquired a 24 percent stake of power grid operator IPTO, one of the biggest Chinese investments in Greece to date.

In addition, a number of Chinese companies, including China Energy and the Sumec group, have signed Memorandums of Cooperation with Greek enterprises such as the Copelouzos group and PPC.

In the renewable energy market, Chinese-controlled EDP Renoveis has been awarded capacity, through competitive procedures, to develop RES projects.

SGCC has indicated it could be interested in an upcoming Greek electricity market privatization to offer a stake in distribution network operator DEDDIE/HEDNO.

Sale of additional IPTO stake likely, priority rights for SGCC

The government is seriously considering a further sale of power grid operator IPTO by offering part of a 51.12 percent stake directly and indirectly controlled by the Greek State in a procedure that would also offer the operator’s management.

State Grid Corporation of China (SGCC), which acquired a 24 percent stake of IPTO in 2017, is expected to be given priority rights in any further sale.

A decision is not expected until October. Officials supporting a further sale cite the operator’s improved performance since SGCC’s acquisition approximately two years ago.

Also, the sale of a greater IPTO stake would provide additional impetus to the execution of the operator’s investment program, supporters of the plan note.

Energy minister Costis Hatzidakis has already noted a further sale of IPTO is a plan on the government’s agenda.

Energy ministry preparing for further IPTO sale of 20-30%

The energy ministry is looking to sell a further stake of power grid operator IPTO, believed to be in the range of 20 to 30 percent, newly appointed energy minister Costis Hatzidakis hinted in parliament yesterday without making any specific mention of the operator.

He told Greek Parliament that a further privatization in electricity transmission was being considered.

State Grid Corporation of China (SGCC) acquired a 24 percent stake of IPTO in 2017.

Though it is still too early to make any assumptions, the government, expected to commission a consultant for this specific privatization, will be determined to maintain a solid minority stake of IPTO for the Greek State.

IPTO’s share price has risen by 26 percent over the past year. The value of the company’s share ended yesterday’s session at 2.01 euros, up 1.65 percent, following the energy minister’s remark in parliament.

The consultant to be commissioned for the sale of a further IPTO stake can be expected to deliver specific proposals on the level of the stake to be offered, as well as the sale procedure and its dates.

The power grid operator’s listed affiliate company IPTO Holding posted a net profit increase of 83.4 percent in 2018, reaching 42.3 million euros.

The IPTO company’s net profit rose to 85.6 million euros, a 38.6 percent year-on-year increase, while its EBITDA reached 183 million euros, a 6.4 percent increase.

IPTO’s investments totaled 178.2 million euros in 2018, a 154 percent increase compared to a year earlier.

 

Brussels asks RAE to inspect Chinese entry into Greek RES sector, IPTO

RAE, the Regulatory Authority for Energy, acting on a European Commission request, has begun an examination process to determine if a strategic agreement between the Copelouzos group and China’s state-run CHN Energy for the latter’s acquisition of wind energy parks creates any EU regulation issues regarding fellow state-run SGCC’s (State Grid Corporation of China) recent 24 percent stake buy into Greek power grid operator, authority sources have informed energypress.

RAE has been asked to examine whether CHN Energy’s agreement to buy Copelouzos wind energy farms with a total capacity of 1,500 MW violates an EU directive concerning the separation of a single entity’s activities in energy production, supply and transmission, according to the same sources.

In essence, RAE is being asked to inspect IPTO’s current certification as a result of SGCC’s purchase of a stake in the Greek operator before determining whether a follow-up certification process will be needed.

Much ground needs to be covered before the strategic agreement reached between the Copelouzos group and CHN Energy turns into an actual deal, the RAE sources told energypress.

The European Commission’s intervention is also linked to CHN Energy’s interest in the main power utility PPC’s ongoing sale of the Meliti and Megalopoli lignite-fired power stations, part of a bailout-required sale of PPC lignite units, the sources admitted.

Brussels warns Chinese, Czech investors over PPC units sale

Prospective buyers of main power utility PPC lignite-fired power stations included in a bailout-required disinvestment package representing 40 percent of PPC’s overall lignite capacity will need to comply with regulations and utilize these power stations as independently as possible from PPC, the European Commission has noted in a stern warning presumed to be directed at China’s CHN Energy and the Czech Republic’s Seven Energy, both interested in the sale.

CHN Energy, expected to bid for PPC’s Megalopoli and Meliti power stations along with the Copelouzos group as a bidding partner, is owned by the Chinese state, also the owner of State Grid Corporation of China (SGCC), holding a 24 percent stake in Greek power grid operator IPTO, until recently a PPC subsidiary.

As is widely known, the European Commission has not embraced Chinese involvement in strategic firms located on European territory. It is believed IPTO will need to undergo a renewed certification procedure if CHN Energy submits an offer for the two aforementioned PPC power stations.

The Czech Republic’s Seven Energy, planning to join forces with Terna for the PPC sale, has proposed a still-unspecified collaboration with PPC entailing a share of profits and losses over a six-year period.

Brussels increasingly vigilant towards Chinese investments

The European Commission is maintaining a passive yet increasingly vigilant watch on Chinese energy-sector investments in Greece and other EU member states, Brussels officials have indicated in comments to journalists.

China’s penetration of European markets is not viewed negatively as long as the related entrepreneurial activity complies with EU law, officials in Brussels pointed out.

Highlighting this intensifying lookout, Chinese initiatives in the Greek market were raised at a Brussels news conference held by European Commission officials.

Journalists forwarded questions concerning last year’s acquisition by SGCC (State Grid Corporation of China) of a 24 percent stake in Greek power grid operator IPTO, as well as CHN Energy’s interest in an ongoing bailout-required sale of main power utility PPC lignite assets, including the Meliti and Megalopoli power stations.

“Chinese investments can take place as long as they are in line with EU law and meet all obligations regarding electricity supply sufficiency,” one Brussels official noted. “The extent to which this is being observed in Greece’s case will be evaluated when the time comes to do so.”

IPTO revision offers career-spanning job protection for staff

The power grid operator IPTO’s board has decided to revise an agreement reached last summer with strategic partner State Grid Corporation of China (SGCC) to protect the jobs of employees until they have qualified for pension rights.

The previous agreement, signed by the two sides in June last year, offered limited job protection for three years, until 2020.

IPTO’s move has been accepted by SGCC, according to an announcement released by the power grid operator.

The decision means that a total of 1,250 IPTO employees and an additional 75 new staff members undergoing recruitment procedures through the Supreme Council for Civil Personnel Selection (ASEP) will be protected until they reach pension ages.

As a result, IPTO now stands as the only state-controlled utility offering career-spanning job protection. Following last year’s privatization, the Greek State controls 51 percent of IPTO, SGCC holds a 24 stake, and public investors the remaining 25 percent.

Job protection until retirement has even been abolished at the main power utility PPC, until recently IPTO’s parent company. All employment agreements at PPC, controlled by the Greek State with a 51 percent stake, were revised several years ago, during the bailout period. Specific time periods of employment agreements were made indefinite, entitling PPC’s administration to cut jobs whenever this is deemed necessary for the corporation’s sustainability.

 

Union cites PPC employee asset rights in European Court case

Genop, the power utility PPC’s main union, has resorted to an older argument used as an attempt to stop the split and sale of power grid operator IPTO, a former subsidiary, by citing PPC employee asset ownership rights in an effort to delay the bailout-required disinvestment of PPC lignite units and mines, representing 40 percent of the power utility’s overall lignite capacity.

The union, in a case prepared for the European Court, contends that PPC employee and retired personnel asset ownership rights have been incorporated into the company as a result of social security contributions withheld by PPC.

Genop used the same argument, more or less, in a case filed about a year ago to the European Court against the sale of 24 percent stake of IPTO to the State Grid Corporation of China (SGCC). Though the European Court has yet to deliver a verdict on the matter, neither the IPTO sale nor its operation under an entirely new ownership set-up, were obstructed.

Genop was encouraged to also resort to European Court action against the PPC disinvestment obligation as the union is counting on the pending IPTO-related verdict.

The union group is basing its worker asset co-ownership rights case on an agreement reached in 1999 between the then-Development Ministry and Genop over social security issues for personnel ahead of PPC’s bourse listing.