IPTO net profit at €61.7m in 2017, €85m expected by 2021

IPTO, the power grid operator, has posted a net profit figure of 61.7 million euros for 2017, regarded as a better-than-expected result.

The operator’s EBITDA reached 172 million euros, a 13.1 percent increase, while investment costs rose totalled 70.1 million euros, a reflection of the faster rate of investments being carried out. Profit after tax increased by 64.4 million euros.

According to a revised IPTO forecast, net profit is expected to reach 85 million euros by 2021, while the operator’s EBITDA is seen reaching 220 million euros during this period.

The operator’s significantly increase profitability has been attributed to two factors, one of these being a total turnover increase to 256 million euros, from 249 million euros in 2016, and a 12.3 percent reduction in operating costs, to 89.1 million euros from 101.6 million euros in 2016.

As noted by IPTO, the operator, backed by SGCC, its strategic partner, plans to make investments worth one billion euros by 2021.

The operator has swiftened the development of major projects, as highlighted by the swift completion of the first phase of the Cyclades interconnection. The operator’s board has also rescheduled its completion target for this interconnection’s third phase to 2020 from 2022.

 

IPTO, HEDNO’s WACC set at 7% for 2018, SGCC to react

The WACC (Weighted Average Cost of Capital) for IPTO, the power grid operator, and HEDNO/DEDDIE, the Hellenic Electricity Distribution Network Operator, has been set at 7 percent for 2018, according to a decision made by RAE, the Regulatory Authority for Energy.

Electricity transmission and distribution costs for 2018 are expected to be calculated next week, based on consumption data to be presented by IPTO and HEDNO.

According to energpress sources, HEDNO tariffs are not expected to change but, on the contrary, IPTO tariffs for high and medium voltage will fall by nearly 10 percent. Household tariffs are not expected to change while mild hikes are expected for low-voltage electricity used by professionals.

IPTO had sought an 8.8 percent yield for 2018. IPTO’s turnover reached 249 million euros in 2016 and 265 million euros in 2015. Based on RAE’s latest WACC decision, the power operator’s revenues in 2018 will reach 233.959 million euros.

As for the four-year regulatory period’s three other years, RAE has decided on WACC figures of 6.9 percent in 2019, 6.5 percent in 2020 and 6.3 percent in 2021 for IPTO. The operator’s revenue figures will be greater despite these yield drops as IPTO’s asset base is expected to exceed 2 billion euros by the end of the four-year period from 1.4 billion euros at present.

As a result, IPTO’s revenue is expected to reach 252.4 million euros in 2019, 281.01 million euros in 2020 and 285.89 million euros in 2021.

IPTO’s strategic partner State Grid Corporation of China (SGCC) is expected to react against the RAE decision concerning the operator’s yield rates over the next four years. The Chinese investor had loftier expectations when it acquired a 24 percent stake in IPTO last year.

 

IPTO board to visit SGCC heads in Beijing for results presentation

The administration of IPTO, Greece’s power grid operator, has scheduled to visit Beijing next week to present to the leaders of State Grid Corporation of China (SGCC), the operator’s strategic partner, IPTO’s latest and yet-to-be-released financial results as well as a business growth plan. SGCC acquired a 24 percent stake in IPTO last year.

According to sources, IPTO’s results, to be released within the next few days, will be better than expected, a prospect that will surely please the operator’s Chinese partner.

Meanwhile, the operator is waiting for a decision, any day now, from RAE, the Regulatory Authority for Energy, on new tariffs, to apply for a four-year period.

IPTO is bolstering its position through the development of new interconnections, planned to follow the first phase of the Cyclades interconnection.

The second phase of the Cyclades interconnection with the mainland is expected to be completed in early 2019. A third phase is planned to be completed by the end of 2020, while a fourth phase is set to be added to the operator’s ten-year business plan covering 2019 to 2028.

An international tender for the first phase of the Cretan interconnection, a small-scale connection to link Crete and the Peloponnese, is expected to be announced within the next few days. Talks with the EuroAsia consortium for the establishment of a partnership for development of the second phase of the Cretan interconnection, to link Athens with Crete, are in progress.

The Cretan interconnection is planned to be incorporated into the prospective EuroAsia project, which will link the Greek, Cypriot and Israeli grids.

IPTO: The day after the ownership unbundling

The following speech, published in its entirety, was delivered by Manos Manousakis, chief executive at IPTO, Greece’s power grid operator, at the Athens Energy Forum yesterday. 

Ladies and Gentlemen,

It is an honor and a pleasure to be one of the speakers of this year’s Athens Energy Forum, which is taking place against the backdrop of the radical transformation of the Greek energy market, which is being liberalized.

At the same time, the Greek market is gearing up to meet the main challenges arising from the implementation of the EU Energy Policy, namely:

  1. The increased penetration of Renewable Energy Sources in the Transmission System and Distribution Grid
  2. The de-carbonization of electricity production and
  3. The integration of the wholesale electricity markets of the EU member states through the introduction of the target model

I will start by briefly explaining the new ownership status and the benefits that stem from it.

As most of you probably know, in June 2017 the ownership unbundling of IPTO [locally acronymed ADMIE] took place.

The Greek State owns a controlling shareholding stake of 51%.

State Grid of China, the world’s largest utility company, is IPTO’s second biggest investor with a 24% stake and active participation in its management.

The company further diversified its investor base following the listing of its affiliate company IPTO Holding in the Athens Stock Exchange.

The strategic partnership between the Greek State and State Grid has already started to show results, through the improvement of the financial and operational ability.

With this structure, IPTO aims to exemplify the way a company under state control can modernize itself and improve its efficiency, in order to play a leading role in the new energy landscape.

In this context, the company has set two main objectives for 2018:

First, faster project delivery.

Second, successful implementation of the target model and specifically of the balancing market, which falls under IPTO’s responsibility.

The new administrative model of the company will facilitate the achievement of these objectives.

One milestone of the restructuring process, which took place at the end of 2017, was a voluntary exit scheme which was successfully completed a few days ago. The participation far exceeded management’s expectations.

Through this scheme, IPTO aimed to make room for younger, highly skilled employees who are sorely needed.

Another important element is that the active management of IPTO’s assets has been placed at the heart of its new organizational model.

The ambitious targets for RES penetration into the energy mix require the upgrade of the infrastructures for the electricity transmission and the ‘smartening’ of the grids.

All the modern TSOs in Europe (RTE from France, ELIA from Belgium, 50 Hertz from Germany etc.) consider asset management as one of their main functions.

IPTO is now following their example with the creation of a new Asset Management Unit.

The main mission of this Unit is the optimal exploitation of the company’s assets, the extraction of maximum value from their use.

In this regard, I would like to point out that IPTO is implementing a broad asset renovation program and the first tenders will be published in the near future.

With this new improved administrative structure, IPTO will be better prepared to pursue its first objective, which is the timely execution of the major interconnection projects that are foreseen in the company’s business plan.

We are talking about investments of 1 billion euros until 2021.

The company is prioritizing the Cyclades and Crete Interconnections.

The first phase of the Cyclades interconnection, which entails the interconnection of Syros, Paros and Mykonos to the mainland transmission system, is already in the test phase of electrification.

As a result, both the security of electricity supply and the environmental footprint of those islands will be upgraded.

The dated, fuel oil power plants [on islands] will soon cease to operate.

IPTO is also placing great emphasis on the Crete Interconnections which are of pivotal importance to the Greek economy.

Why? Because they will secure the energy supply of the country’s largest island and drastically reduce the cost of electricity for all Greek consumers.

In the course of the implementation of these projects, the company will benefit from the technical expertise of State Grid, which is spearheading China’s effort to transition to clean energy.

State Grid is a world leader in developing Ultra High Voltage Transmission Lines and building smart grids that promote the utilization of RES.

It boasts the largest installed capacity of wind and solar production in the world.

It is obvious that IPTO has a lot to earn from its know-how.

At a recent international conference, a State Grid executive stated that the company’s goal is to turn Greece into an electricity hub via interconnections to the Balkans, Africa and Asia.

It should be noted that according to a recent study of an Expert Group the development of new transnational electricity interconnections is becoming an EU priority, as the current interconnection target of 10% is not considered ambitious enough and it will be increased to 15% by 2030.

Europe is heading towards a well-integrated energy market.

Electricity interconnections are the physical component of making this market truly European by connecting Member States’ networks, thus offering:

-capacity for electricity trade

-improved security of supply

-integration of the growing share of renewable electricity production.

In this direction, IPTO is prioritizing the development of a second electricity transmission line between Greece and Bulgaria. This project has already been included in the list of Projects of Common Interest for the European Union.

Having mentioned the integration of the EU energy market, I would like to move on to the second objective of IPTO for this year, which is the setting up of the Balancing Market, the part of the target model for which the company is responsible.

I will try not to go into the highly technical details.

Let me just say that the Balancing Market is the last of the four Target Model markets.

However, its role is very important since it reflects the actual cost of balancing electricity supply and demand, close to real time.

A well designed Balancing Market is not only important to provide the TSO with sufficient Balancing Services at all times in order to safeguard secure system operation.

It is also essential to ensure an efficient functioning of the overall electricity market.

Consequently, they affect Participants’ decisions in the forward market timeline.

The basic principles of the Balancing Market design are:

-Central Dispatch System

-Unit based participation in the market

The Balancing Market consists of:

A Balancing Energy Market,

Balancing Reserve Market

Imbalances Market, which is an ex post market for settlement of imbalances

IPTO performed a Public Consultation on the Balancing Market Code between December 2017 and January 2018.

Participants’ comments were received and the most recent update is that a second version of the Code was sent to the Regulatory Authority for Energy for the subsequent phase two of the Public Consultation, which is going to be performed by the Authority.

I hope I gave you an oversight of the day after the ownership unbundling of IPTO.

Let me conclude my speech by saying that the future will be electric, de-carbonized and interconnected. IPTO will play an important role in this process.

Thank you

IPTO pressured to hasten interconnections, reduce fees

IPTO, the power grid operator, currently preparing to submit its updated 10-year investment plan, covering 2019 to 2028, to local authorities around March, is believed to be facing pressure to deliver a more ambitious interconnections program and also reduce its network usage charges.

IPTO’s new network usage charges, which will apply for a four-year period, should be slightly reduced, given the current shape of certain factors, including the country’s investment risk factor, relatively better than in 2014, when network usage charges were last reset, for 2014 to 2017.

However, the preferences of SGCC, the State Grid Corporation of China, a strategic partner of IPTO since early last summer, following its acquisition of a 24 percent stake in the Greek grid operator, will also need to be taken into account. SGCC officials have already begun pushing for an increased rate of return (WACC) on the Chinese firm’s investment.

IPTO has avoided including in its business plan certain interconnection projects that still need to be developed but is expected to face pressure to incorporate one of these, such as the fourth stage of the Cyclades interconnection, or the Dodecanese interconnection. On the other hand, the cost of developing such interconnections at a swifter pace will need to be factored into the operator’s calculations determining the level of network usage tariffs to be paid by consumers.

Authorities are believed to be examining the prospect of establishing a special category for the island interconnection projects which would enable these to first be developed and launched before the operator begins retrieving costs.

Such a solution would prevent consumers from having to pay in advance. Instead, consumers would begin paying increased network usage fees once projects have been completed but, by that stage, the Public Service Compensation (YKO) surcharge, subsidizing high-cost electricity production on Greece’s non-interconnected islands, will have been drastically reduced, offsetting the network usage hike.

The interconnection projects promise to greatly reduce the cost of generating electricity on the islands. High-cost local plants are now being used on the non-interconnected islands.

 

Cyclades link project open to non-EU bids, SGCC strategically placed

A revision by IPTO, Greece’s power grid operator, to the terms of an international tender concerning a Cyclades islands interconnection has opened up the process to non-EU firms that have signed government procurement agreements (GPAs) with the World Trade Organization (WTO).

Even so, market officials consider the emergence of bids from companies based in countries such as China, Brazil and India, obvious candidates as a result of the revision, an unlikely prospect given the interest in such projects of China’s SGCC, which acquired a 24 percent stake in IPTO earlier this year.

SGCC’s strategic partersnhip with IPTO is expected to repel bids, including from other Chinese companies specializing in submarine cable interconnections, for this IPTO project and similar upcoming endeavors.

The revised terms concern the second phase of a Cyclades islands interconnection project to link Paros with Naxos and Naxos with Mykonos. The project is budgeted at 42 million euros, not including VAT.

The revision of the tender’s terms includes a deadline extension for offers, now reset for January 12.

IPTO plans to stage a series of tenders for major submarine interconnection projects over the next few years, beginning in 2018, which makes for lucrative prospects.

A third phase of the Cyclades interconnection concerns the development of a link between coastal Lavrio, southeast of Athens, and Syros, budgeted at 150.5 million euros and scheduled for completion in 2022.

Other upcoming interconnection projects planned include a small-scale Cretan interconnection linking Hania with the Peloponnese, budgeted at 322.7 million euros. Its tender is expected to be completed in 2018.

A tender for the large-scale Cretan interconnection, budgeted at 713 million euros, is planned to take place somewhere between 2019 and 2020.

Development of the EurAsia Interconnector, to link the Greek, Cypriot and Israeli grids, budgeted at 3.5 billion euros, is also being pursued.

The agenda also includes the EuroAfrica Interconnector, planned to link the Greek, Cypriot and Egyptian electricity grids. Offiical estimates for this project’s cost have yet to be released, but it should be in the range of the budget calculated for the Euroasia Interconnector. A 320-kilometer submarine crossing whose development is planned to commence in 2019, its budget is estimated at 2.4 billion euros. The Euroasia Interconnector has already been classified as a Project of Common Interest (PCI), enabling EU funding.

Major developments can be expected in the interconnection domain. Without a doubt, SGCC, as IPTO’s strategic partner, has already secured the pole position.

 

 

IPTO head expresses interest for more Chinese partnerships

The strategic partnership recently established between IPTO, Greece’s power grid operator, and SGCC (State Grid Corporation of China), which acquired a 24 percent stake in the operator, has so far proved exceptional, IPTO chief executive Manos Manousakis told Chinese news agency Xinhua.

The results of this partnership are already apparent in IPTO’s improved performance, which is why the operator plans to seek further collaborations with Chinese partners, Manousakis noted.

IPTO recently signed a Memorandum of Understanding with CDB, the China Development Bank, one of the world’s biggest banking institutions. CDB has expressed an interest to finance companies and projects in Greece. IPTO hopes that CDB financing will provide impetus to the operator’s ambitious growth plan.

“We signed a very important memorandum of understanding with China Development Bank to explore the possibilities of financing our new projects and for the company’s capital,” Manousakis told the Xinhua agency. “Major interconnection projects on the Greek mainland and islands, as well as international interconnection projects in the Mediterranean all lie ahead,” he added.

PPC cash reserves down €200m in 2 years, no sign of improvement

The main power utility PPC’s cash reserves shrunk by nearly 200 million euros between the first half of 2015 and the first half of 2017, without any solutions in sight for this amount’s reinstatement. The situation further highlights the utility’s cash flow problem.

PPC’s cash reserves totaled 701,987 euros in the first half of 2015, dropped to 574,567 euros in the first half of 2016, before falling further to 511,797 euros in the first half this year, a 27 percent drop over the two-year period.

The utility’s inability to boost its cash flow remains the corporation’s biggest problem, as highlighted by PPC’s stagnant unpaid receivables figure, unchanged over the past few months and stuck at an alarming level of 2.4 billion euros.

Broken down into categories, PPC’s unpaid receivables figure, in September, amounted to 1.66 billion euros in the low-voltage category; 331 million euros in the high-voltage category; 205 million euros in the medium-voltage category, while the total owed by the public sector to the state-controlled utility is 210 million euros.

In actual fact, PPC’s unpaid receivables figure is even higher than the aforementioned 2.4 billion-euro total as, the utility, for quite some time now, has not factored in amounts linked to monthly-installment payback agreements reached with customers. These arrangements, alone, are believed to be worth many millions of euros.

In comments accompanying a second-quarter financial report, PPC admitted that the percentage of its customers continuing to meet monthly installments of their payback agreements is “uncertain”.

PPC’s poor cash flow stands no chance of improving over the next few months. An extraordinary 172.2 million-euro cash injection provided by the recent sale of 24 percent of subsidiary IPTO, Greece’s power grid operator, to SGCC (State Grid Corporation of China), provided temporary relief, as reflected by the utility’s first-half profit of 14.4 million euros.

Had this amount not been factored in, PPC would have incurred a loss of 148.5 million euros in the first half.

Likewise, the cash that stands to be raised by the utility through the bailout-required sale of lignite units next summer promises just temporary relief as the cash inflow will be generated by one-off sales.

Many pundits believe PPC, whose payroll numbers 19,000 staff members, remains an overstaffed enterprise.

EBRD: China capitalizing on Greek energy market openings

A European Bank for Reconstruction and Development (EBRD) report monitoring China’s investments in Europe, whose findings on Greece were presented in Athens yesterday, notes that China, sensing market opportunities, has been able to enter the Greek market after being permitted to do so by European authorities, However, the country is now facing tightening conditions being engineered by the EU, the report mildly suggests.

The EBRD report, authored by Dr. Jens Bastian and funded by the Central European Initiative, an intergovernmental forum committed to supporting European intergration through cooperation among member states, details China’s aggressive investment approach in Greece and places particular emphasis on the local energy sector.

Attention is paid to Greece’s role in China’s wider plans. The report describes Greece as a gateway for Chinese investments in the wider Balkan region. China’s strategy, continuously bolstering the country’s standing abroad, has cultivated aspirations for the Balkan and central European markets, the EBRD report notes.

It also notes that Chinese investors, contrary to other interested parties, have made the most of the subdued investment activity in Greece and shown a willingness to take risks and pursue long-term business strategies.

The EBRD report also points out that reliable ties have been established between Chinese investors and Greece’s political and business communities. As a result, Chinese investors are now placed in the pole position for Greek projects, it notes.

Reference is made to two major Chinese energy-related moves in Greece. One concerns the interest of the China Development Bank (CDB) to reinforce its presence in Greece, primarily through financing energy sector projects, as has been pointed out by the bank’s chief, Hu Huaibang. CDB and the Bank of Greece recently signed a memorandum of cooperation.

The recent entry of SGCC (State Grid Corporation of China) into IPTO, Greece’s power grid operator, as a strategic partner with a 24 percent, is also presented in the report. This agreement ranked as the second largest investment to be made in Greece in 2016. Another Chinese investment, Cosco’s takeover of the Piraues Port Authority (OLP), topped the list.

 

 

PPC head stresses utility’s persistence with China partnerships plan

The main power utility PPC’s top official has once again highlighted his determination to stick to a plan envisioning business partnerships with Chinese enterprises as a way out of the utility’s problems along many fronts.

Manolis Panagiotakis, PPC’s chief executive, is counting on Chinese capital and knowhow as support for the utility’s new investment plans, intended to offset bailout-required market share losses in electricity production and retail, the official made clear in an interview for Chinese news agency Xinhua, which took place in northern Greece’s west Macedonia region, a key local energy producing region.

PPC’s administration is striving to lead the utility into a new era where business interests will stretch beyond electricity production and sales, Panagiotakis noted in the interview, adding that Chinese firms are pivotal to these aspirations.

Panagiotakis noted that agreements already reached between PPC and major Chinese firms point to a bright future for Greek-Chinese collaborations in the energy sector. Chinese enterprises can play a fundamental role in the Greek energy sector’s new strategic planning, the PPC chief remarked.

The PPC head cited the utility’s plan for the co-development, with CMEC, of a lignite-fired power station in Meliti, northern Greece. He described this as a feasible project regardless of the outcome of a bailout-required sale faced by PPC concerning 40 percent of its lignite capacity.

He also made note of another plan involving CMEC for the development of a smart meters production facility. A preliminary agreement has already been signed for this project.

Panagiotakis described SGCC’s (State Grid Corporation of China) recent acquisition of a 24 percent stake in IPTO, Greece’s power grid operator, as a positive development. He stressed that PPC is keen to expand this SGCC strategic partnership, citing the electric car market and a submarine power cable interconnection project to link the Greek mainland with Crete.

The PPC chief also noted that the Greek power utility is interested in working with Shenhua on various projects concerning innovation in the environmental sector, an area in which Shenhua has made major progress, he added.

Panagiotakis has held meetings with 21 major Chinese enterprises on two official visits to China since taking over the helm at PPC about two years ago.

 

 

 

 

Tender cancellation at IPTO highlights SGCC’s shape-up determination

The recent entry of SGCC (State Grid Corporation of China) into IPTO, Greece’s power grid operator, as a strategic partner with a 24 percent stake is already making an impact on the operator’s administrative decisions, as highlighted by the cancellation of an existing e-auction system tender. On a wider level, all issues currently in progress are being reassessed at IPTO.

IPTO has officially announced that the asforementioned tender, worth 55,000 euros and concerning the implementation of an e-auction system, has been cancelled and will be relaunched once the operator’s needs have been reexamined.

Though this tender was not lucrative, its cancellation highlights the determination of SGCC officials to get things in optimal shape at IPTO.

The cancellation was immediately followed by the establishment of three new administrative departments at IPTO to help reshape the operator in accordance with its new management model.

It appears that further changes, on various levels, lie ahead at IPTO as part of this readjustment process.

IPTO’s newly appointed chief executive Manos Manousakis, well informed on the new digital era being entered by the energy sector, appears determined to steer the operator into the future.

SGCC officials assume posts at IPTO Athens headquarters

Officials of SGCC (State Grid Corporation of China), which has acquired a 24 percent stake in IPTO, Greece’s power grid operator, arrived at the operator’s Athens headquarters yesterday to take up their posts in a new era for the operator that ushers in the Chinese firm as a dynamic strategic partner.

Based on the new shareholders’ agreement, SGCC has a three-seat representation on IPTO’s new nine-member board.

Besides yesterday’s arrival of SGCC executives, an additional twenty or so staff members representing IPTO’s new strategic partner, including secretaries, translators and other associates, are also in the process of assuming posts at the operator’s Athens headquarters.

Details that need to be sorted out include payroll arrangements and whether the SGCC officials stationed at IPTO will be subject to a bailout-related salary limit imposed on Greek state utilities.

All operational costs at IPTO, including salaries, are raised through regulated charges and need to be approved by RAE, the Regulatory Authority for Energy. Besides RES’s required approval, current regulations also limit state utility salaries to 65 percent of the total respective salary expenses registered in 2009. If these limits are exceeded as a result of the Chinese team’s entry, a prospect that cannot be ruled out, then IPTO staff members may need to accept slight pay cuts.

Now backed by a new strategic partner possessing a minority stake but enormous capabilities, IPTO will strive to establish itself as a key player in Greece’s energy market, functioning independently, beyond the grasp of its former parent company PPC, the main power utility.

Network investment and development plans are already being discussed, especially new interconnection projects, including the Crete submarine link with the mainland, a top priority.

 

Increased administrative rights, monitoring at IPTO

Power grid operator IPTO’s new certification, jointly issued by the European Commission and RAE, the Regulatory Authority for Energy, to facilitate the operator’s split from main power utility PPC, the parent company, offers increased administrative rights too shareholdres but also enhances the terms for supply security.

IPTO and the stategic investor must fully adhere to Greek and EU law and abide by RAE and EU decisions on supply security. Any violations could terminate the operator’s certification and lead to penalties, the certification specifies.

In the case of IPTO, State Grid International Development (SGID), representing parent company SGCC (State Grid Corporation of China), which has acquired a 24 percent share of the operator, possesses extended rights to co-decide on strategic matters at IPTO such as strategic planning, the operator’s annual budget and investment plans.

The certificiation’s terms also provide for monitoring of activities to ensure adherence to EU law and supply security policies.

The future developments concerning activities pursued by SGID, SGCC, and, on a wider level, the Chinese government in Greece amd Europe need to be monitored to ensure that security supply conditions remain unchanged, the new IPTO certification points out.

New era dawns at IPTO as SGCC role comes into play

A new era has dawned at the power grid operator IPTO with the new shareholders agreement, prompted by SGCC’s (State Grid Corporation of China) acquisition of a 24 percent stake, now taking effect and the current board set to resign today.

Names of various officials have been mentioned for the operator’s new board but confirmations have yet to be made. One market official hailing from the local telecommunications sector and trusted by energy minister Giorgos Stathakis is being touted as a favorite for IPTO’s top executive post. Written consent will be required from SGCC for the appointment of the new chief executive at IPTO.

As for SGCC’s three-seat representation on IPTO’s new nine-member board, the Chinese firm appears likely to bring in company officials from China. It was previously believed that SGCC would be represented by bank officials associated with the strategic investor.

For the sake of comparison, developments at the Piraeus Port Authority (OLP) since another Chinese investor, Cosco, acquired a majority stake, have included a review of all company officials by an independent consultant; employees were offered the opportunity to submit resumes and apply for supervisory and managerial posts; departments and operations were merged; an administrative team comprised of Cosco officials from China was established while local staff was maintained for managerial posts; supply agreements have been thoroughly reassessed with cost cuts in mind; new supplies are being strictly monitored; labor rights and salaries have remained unchanged – at least, for now – and working hours have been more rigidly enforced.

Cosco has also placed greater emphasis on trading activity linked to China. It remains to be seen whether Chinese practices, such as the aforementioned witnessed at OLP, will also be implemented at IPTO.

 

 

IPTO to be closely monitored for energy security protection

The heightened level of administrative authority granted to SGCC (State Grid Corporation of China) for its 24 percent stake acquisition of power grid operator IPTO, whose details were released through yesterday’s disclosure of the operator’s new shareholders agreement, has come as a surprise, but local and European energy authorities will be closely monitoring the operator as a means of protecting the country’s energy supply security.

The arrival of the Chinese company, which has been granted veto rights for a series of key matters, is expected to improve IPTO’s functional ability through SGCC investments and knowhow.

RAE, the Regulatory Authority for Energy, can be expected to closely monitor IPTO and be ready to swiftly intervene with measures securing electricity supply security should the new IPTO board fail to agree on issues. Disagreement at two consecutive IPTO board meetings will push RAE into action, according to the shareholders agreement.

The increased administrative rights, which have raise certain energy security issues, can be expected to also keep the European Commission alert.

IPTO’s shareholders will need to be careful not to infringe national and EU law. The operator’s certification includes terms that will prompt reassessment should regulations not be honored.

 

 

IPTO files case against former chief seeking pay rise return

IPTO, the power grid operator, has filed charges against its former chief executive Giannis Blanas seeking the return of approximately 300,000 euros, a sum linked to an exorbitant pay rise the official had given to himself, including retroactive sums, while heading the company. This legal challenge comes following a decision reached by IPTO’s board just a few days ago.

Blanas, while in charge at IPTO, is believed to have taken the initiave to increase his monthly salary from approximately 4,600 euros to 20,000 euros.

In his struggle to avoid returning the amount sought by IPTO, the official has, until now, contended that he acted in accordance with a law ratified late in 2015 that abolished a remuneration upper limit set for administrative officials serving at utilities.

Meanwhile, IPTO’s current administration is set to resign this Friday as a result of the changes taking place following SGCC’s (State Grid Corporation of China) acquisition of a 24 percent stake in the operator. A new board will need be appointed, as specified by the new IPTO shareholders agreement.

At this stage, it remains unclear how extensive the board changes at IPTO will be. An additional four seats will be added to the operator’s current five-member board. SGCC will be entitled to appoint three board members of its choice.

Unconfirmed reports suggest that a decision has been reached for a new chief executive. SGCC will need to provide written consent for the appointment.

 

SGCC given administrative rights, IPTO agreement shows

SGCC (State Grid Corporation of China), which has agreed to acquire a 24 percent stake in the power grid operator IPTO, a main power utility PPC subsidiary, has gained administrative rights, including the ability to block decisions on important matters, and, in addition, would be offered first choice should a further stake of the operator be sold, according to the new IPTO shareholders agreement.

The new IPTO nine-member board will be comprised of three representatives from the operator’s holding company, three from SGCC, two from the Greek State, while one member will represent IPTO’s employees.

The managing director will be appointed following written consent from SGCC. Should any disagreement arise, IPTO will present three additional candidates for the top post and SGCC will be required to select one of these within a seven-day period, according to the shareholders agreement. If this is not achieved, then a tender lasting no more than seven days will need to be staged for the appointment of a special recruitment advisor, who will present a list of five additional candidates. These will be eliminated over a series of rounds until one candidate is left for the top post.

Should a special recruitment advisor not be required for the appointment of IPTO’s managing director, then SGCC will be given the right to appoint the operator’s deputy head and chief financial officer.

IPTO to be monitored non-stop, certification terms note

RAE, the Regulatory Authority for Energy, has finalized its certification endorsing the power grid operator IPTO’s new equity make-up following an agreement with China’s SGCC (State Grid Corporation of China) that provides the latter a 24 percent stake in IPTO, a main power utility PPC subsidiary, energypress sources have informed.

Prior to this development, the European Commission’s Directorate-General for Energy had issued its own endorsement with certain observations intact. These conditions have been incorporated into RAE’s text, expected to be announced within the next few days.

Based on the conditions set, IPTO will be subject to constant monitoring for any prospective equity make-up changes, be they the result of moves by Greek or foreign investors.

IPTO’s certification will need to undergo reexamination should any Chinese state-controlled company enter Greece’s electricity market, as a means of checking on whether EU regulations are being adhered to, according to the conditions.

SGCC has not been granted veto rights for IPTO administrative matters pertaining to Greek energy supply security.

RAE to push for Dodecanese, north Aegean interconnections

RAE, the Regulatory Authority for Energy, intends to push hard for the development of submarine interconnections linking the islands of the Dodecanese and north Aegean with the mainland. Completion of these endeavors would offer electricity network links between the country’s mainland and virtually all of the islands as plans are already in progress for interconnections concerning the Cyclades and Crete.

Though not widely known, RAE, through a law ratified last August, has been given both the authority and responsibility to determine the best possible means of electrification for the Greek islands. The authority also has the right to revoke licenses issued for diesel-fueled power stations, costly electricity generation means, operating on islands if it deems interconnection projects may be developed. This would put the pressure on IPTO, the power grid operator, to act swiftly. RAE also has the right to commission the development of projects to others if IPTO is unable to do so. IPTO would then be obligated to operate these projects once completed.

RAE is expected to deliver a list detailing all moves needed for optimal electricity supply to the islands by the end of this year.

Officials at RAE have told energypress the authority is determined to use its powers to ensure that all needed interconnection projects are developed swiftly.

Older data and studies examined by RAE indicate that approximately 80 percent of electricity consumption on the Greek islands can be provided through mainland interconnections. Apart from some of the smaller islands, for which such projects would not be feasible, interconnections for all other islands would offer benefits, including the reduction of public service compensation (YKO) surchages. These are added to electricity bills to fund the costly island power units.

“Even now, at a time of relatively low oil prices, these interconnections are feasible, and would be even more sustainable should oil prices rise to levels of 90 and 100 dollars per barrel,” RAE chief Nikos Boulaxis recently told Greek parliament.

Priority should be given to the Dodecanese, to be interconnected with Crete or Athens, and north Aegean islands, RAE believes.

In comments yesterday, Prime Minister Alexis Tsipras said an agreement between the main power utility PPC and China’s SGCC (State Grid Corporation of China) for the latter’s acquisition of a 24 percent stake in IPTO, a PPC subsidiary, offers new prospects. SGCC’s leadership told Tsipras, on his recent visit to Beijing, the company is keen to further develop Greece’s electricity networks, including the island interconnections.

 

 

 

Brussels grants certification for IPTO split and sale plan

The power grid operator IPTO, a main power utility PPC subsidiary, has been granted certification by the European Commission’s Directorate-General for Energy, paving the way for the completion of the operator’st split from its parent company and transformation into an independent entity, energypress sources have informed.

The certification from Brussels has been granted conditionally and will require reassessment whenever any Chinese state-controlled enterprise makes any moves into Greece’s electricity production market.

For the time being, PPC and China’s SGCC (State Grid Corporation of China) have reached an agreement for the latter’s acquisition of a 24 percent stake in IPTO.

The procedure leading to the new IPTO is expected to be finalized by mid-June, according to comments made just days ago by the operator’s leadership.

According to the split-and-sale plan for IPTO, the Greek State will end up with a 51 percent of the operator.

The transfer of a 25 percent stake of the operator from PPC to the new IPTO company, for a price of 295.6 million euros, is expected to be approved today at an extraordinary PPC shareholders’ meeting.

Procedures shaping the new IPTO’s administration are also in progress. According to sources, three officials to lead the new IPTO adminstration have already been selected. The president will be chosen by the Greek State, the managing director will also be chosen by the Greek State, but will need SGCC’s approval, while the Chinese strategic investor has been given the right to name the finance and supply managers. These two posts may be merged into one.

Sources informed that IPTO’s current leadership will remain intact but one or two additions will be made. No names have been announced.

General management posts are expected to be added to IPTO’s administration while the board will grow to become a nine-member body.

 

Bailout an obstacle for Chinese interest in PPC projects

Greek energy ministry and main power utility PPC officials appear to be fully aware of concerns in Brussels over warming Greek-Chinese ties for various Greek energy-sector projects, as indicated by additional terms in the recently revised bailout agreement.

These European Commission concerns explain why PPC chief Manolis Panagiotakis remained reserved despite a firm interest expressed by Chinese investors for the Greek energy market during his visit to China earlier this week.

A clause added to the revised bailout, which notes that prospective buyers of PPC units, “based on available information, should neither create any apparent competition problems nor cause delay risks in the implementation of structural measures” could, in one sense, be interpreted as an attempt to obstruct the development of Meliti II and, in addition, block Chinese investors from buying exisiting PPC units and becoming involved in partnerships for the construction and operation of new ones.

PPC and CMEC (China Machinery Engineering Corporation) signed a Memorandum of Understanding (MOU) last September and have held extensive talks on joining efforts for the development of Meliti II, a prospective carbon-fired power station in the Meliti area, close to Florina in Greece’s north.

The Chinese State, which controls CMEC, is also behind SGCC (State Grid Corporation of China), whose agreement to acquire a 24 percent stake in the power grid operator IPTO, a PPC subsidiary, was endorsed by Brussels several days ago. Brussels appears concerned by the prospect of a concerntration of control for the Chinese State.

Pundits told energypress that the additional bailout term will obstruct PPC’s planned collaboration with Chinese companies, a prospect viewed with increased concern by EU member states such as Italy, France and Germany, which, despite their negative stance, have yet to display any clear interest in PPC’s prospective sale of utility units, a bailout requirement.

CMEC, still requiring certain details before making a final decision, appears keen to move ahead with the development of the Meliti II project, sources informed following the PPC chief’s visit to China. The issue may have cleared up within the next month. The future of the nearby Vevi mine, whose coal supply is crucial for existing Meliti I and prospective Meliti II, is a pivotal factor that will influence CMEC’s interest.

Energy minister Giorgos Stathakis recently announced that a new tender will need to be staged for part of the Vevi mine. If so, this could deflate CMEC’s interest in Meliti II.

In China, Panagiotakis, the PPC boss, presented his plans for the development of two more coal-fired power stations, not including Meliti II, in talks with Chinese investors, including the Shenhua and SPIC enterprises.

Shenhua appears interested in becoming involved in environmental upgrades of exisiting PPC power stations and development of new units.

 

 

SGCC agreement for 24% of IPTO endorsed by Brussels

The European Commission has endorsed an agreement between state-controlled PPC, the main power utility, and China’s SGCC (State Grid Corporation of China) for the latter’s acquisition of a 24 percent stake in the power grid operator IPTO, a PPC subsidiary.

The proposed acquisition, priced at 320 million euros, does not breach EU competition regulations, the European Commission announced.

The Greek government had submitted its application to Brussels, seeking an endorsement for the agreement, just over a month ago, on April 10.

Signs of a swift approval from the European Commission had emerged several days earlier, as was reported by energypress.

Commenting on the development, energy minister Giorgos Stathakis expressed satisfaction and underlined that the government’s policy, looking to maintain the Greek State’s control over the country’s electricity networks, was vindicated by the decision.

According to the government’s plan, a 51 percent stake of IPTO will be transferred to the Greek State and 25 percent will be offered through the bourse.

IPTO’s split-and-sale procedure is expected to be finalized at a PPC general shareholders’ scheduled for May 23.

Fast-track process for Brussels approval of SGCC’s IPTO move

A decision by the European Commission’s Directorate General for Competition on an agreement between PPC, the main power utility, and China’s SGCC (State Grid Corporation of China), for the latter’s acquisition of a 24 percent stake in the power grio operator IPTO, a PPC subsidiary, could be nearing as the Brussels competition authority is putting the case through a simplified, fast-track procedure.

This would enable the application’s examination to take considerably less time than the many months normally required in Brussels for such cases.

Greek authorities submitted their application to the DG Comp on April 10, seeking its endorsement for the SGCC acquisition agreement. Approval from Brussels would enable the SGCC purchase to go ahead, bringing in needed cash for PPC.

The DG Comp’s eventual refusal to endorse a sale plan for DESFA’s (natural gas grid operator) 66 percent was a key aspect in that privatization attempt’s downfall.

However, SGCC’s interest in IPTO differs as the Chinese company is seeking to buy a minority stake of the operator. Brussels could set specific management terms.

As previously reported by energypress, Brussels has grown increasingly skeptical of strategically significant acquisitions by Chinese firms.

Current indications suggest the IPTO case is making solid progress in Brussels. If so, one final requirement, certification by RAE, the Regulatory Authority for Energy, and energy authorities in Brussels, will be needed to enable the operator’s split. The DG Energy is not expected to fully use up a two-month period it will have at its disposal but, instead, act swiftly and rely on terms set by RAE.

 

PPC anticipating needed €295.6m as part of IPTO split and sale plan

The board at main power utility PPC has endorsed the split-and-sale plan for subsidiary IPTO, the power grid operator, paving the way for a major cash injection into the parent company’s coffers. This decision will now need to be approved at a PPC shareholders meeting scheduled for May 23.

According to information provided during yesterday’s PPC board meeting, the utility stands to receive 295.6 million euros for the transfer of a 25 percent share of IPTO into a new holding company, as part of this equity transfer from the utility to the Greek State.

The 295.6 million-euro payment PPC expects to receive for the transfer from the Greek State promises to offer relief for the utility, troubled by a hefty unpaid receivables amount.

A recently ratified energy ministry amendment for the IPTO split and sale demands an equity capital increase for the new IPTO holding company reflecting the value of IPTO’s 25 percent.

IPTO’s split-and-sale plan also includes an agreement with China’s SGCC (State Grid Corporation of China) for the latter’s acquisition of a 24 percent stake. The Greek State is expected to end up with a 51 percent stake of IPTO.

Also yesterday, a PPC union voted against an intention by the utility to eliminate an administrative seat held by the Economic and Social Council of Greece (OKE) on the utility board.

OKE’s representative on the PPC board, Giorgos Bitzas, challenged PPC’s chief executive Manolis Panagiotakis to clarify whether this intention is a targeted at Bitzas, personally, or OKE as a whole. The PPC chief denied the plan to is personally linked to Bitzas. He attributed the intention to a wider corporate change at PPC.

OKE’s head official, Giorgos Vernicos, forwarded a letter to PPC protesting the plan. The final say on the matter will be decided by shareholders at next month’s PPC general shareholders’ meeting.

 

IPTO certification procedure taking longer than expected

The certification procedure at IPTO, the power grid operator, a prerequisite for this subsidiary’s split from parent company PPC, the main power utility, and transfer of control to the Greek State is proving to be trickier than originally expected.

Despite recent efforts by local authorities, a delay to the procedure now appears highly likely. The certification procedure is being worked on concurrently with another effort aiming to list a new IPTO holding company on the bourse. This holding company now controls a 51 percent stake of the operator.

Two issues are believed to be holding up IPTO’s certification procedure. RAE, the Regulatory Authority for Energy, has yet to offer its needed approval as it has judged a recent related amendment as being insufficient. This amendment is meant to prevent IPTO’s control from being held by a state agency controlling PPC. Further security has been demanded to ensure the operator’s independence from the power utlity, in line with EU law.

In addition, the meticulousness displayed by the European Commission’s Directorate General for Competition in its part of the overall process is also believed to be holding up the certification procedure.

The DG Comp is generally very cautious when handling cases that could ultimately offer non-EU companies management rights of companies managing European energy networks.

Such DG Comp meticulousness caused a major delay in Greece’s attempt to sell a 66 percent stake of DESFA, the natural gas grid operator, to Azerbaijani energy firm Socar. This deal was eventually cancelled.

More recently, German, French and Italian officials have raised concerns over aggressive takeover attempts by Chinese firms for European enterprises of strategic importance.

The European Commission has examined the possibility of implementing protective measures against non-EU takeover intentions in the technology and defense domains.

Certain pundits believe that an agreement reached between PPC and China’s SGCC (State Grid Corporation of China) for the lattter’s acquisition of a 24 percent stake of IPTO could serve as a crash test for new protective policies adopted in Brussels.

The aforementioned developments make increasingly difficult the chances of IPTO’s certification process being completed within May. This would delay PPC’s badly needed 320 million-euro payment from SGCC for the 24 percent IPTO stake.

 

Issues crucial for PPC cash flow likely to be settled this week

A number of crucial issues linked to main power utility PPC’s cash concerns are expected to be settled this week. Firstly, the utility’s long-running effort to secure a 200 million-euro loan from the country’s four main banks, needed by PPC to cover a bond payment maturing in a few days, should be finalized over the next few days. Also, consulting firm Deloitte Business Solutions is expected to deliver its evaluation on the current market value of a 25 percent stake of PPC subsidiary IPTO, the power grid operator, whose split and sale process is now in progress.

PPC’s board is scheduled to meet Thursday to endorse various procedural matters concerning the IPTO split and also sign the loan agreement for the 200 million-euro amount to be provided by Greece’s four main banks. An interest rate agreement of 5.8 percent has already been reached. The maturing 200 million-bond is likely to be paid the very next day. Otherwise, it is expected to be covered early next week.

As for the Deloitte Business Solutions evaluation of IPTO’s 25 percent, it should work out to a little over 240 million euros. Last year, the consulting firm had put a 964.2 million-euro price tag on the entire IPTO. The aforemenioned 240 million euros represents 25 percent of this figure.

PPC, whose cash flow has been hit hard by an alarming unpaid receivables figure, can soon expect to rake in over 560 million euros – 240 million euros, at least, from the Greek State for its acquisition of IPTO’s 25 percent, as well as a 320 million-euro sum from China’s SGCC (State Grid Corporation of China), which has agreed to acquire a 24 percent stake of IPTO.

Anticipated SGCC payment for IPTO’s 24% a liferaft for PPC

A government move to press ahead with extraordinary parliamentary action for fast-track ratification of an amendment needed to complete the power grid operator IPTO’s split from parent company PPC, the main power utility, and ensuing sale, comes as a sign of the administration’s anxiety felt over the state-controlled utility’s poor cash flow.

The government attached the IPTO-related amendment to a bill concerning Greek forest maps, which was ratified on Tuesday.

European Commission approval is also required before the IPTO sale can be completed. The government will definitely be counting on a swift endorsement from Brussels.

A 320 million-euro payment PPC stands to receive from China’s SGCC (State Grid Corporation of China) for its acquisition of a 24 percent stake of IPTO is believed to be absolutely vital for the utility.

The level of urgency at PPC was highlighted by a recent government decision to offer  relief to the utility in the form of a cash injection believed to have been worth between 130 and 140 million euros. It was provided at a time when the government has essentially stopped covering over pending public-sector payments.

This amount is believed to have been provided either as pre-payment for one year’s worth of electricity consumption by public-sector firms and agencies, in exchange for a 6 percent PPC discount, or for outstanding debt owed by the Greek State to the utility. For years now, a succession of governments has sidestepped public-sector amounts owed to the state-controlled utility.

Certain sources contend that between 50 and 60 million euros of this government payment was provided to PPC to service outstanding public-sector debt, while a further 80 to 90 million euros was paid to utilize PPC’s discount offer.

The anticipated SGCC payment promises to serve as a liferaft for PPC, according to pundits informed on the details of the utility’s financial standing.

Besides the SGCC payment, PPC, will, as a next step, look forward to receiving a still-undetermined amount for the sale of a further 25 percent of IPTO to the Greek State. This amount, to be determined through an official evaluation process, is expected to exceed 300 million euros.

Government and PPC officials, alike, dread the thought of any bureaucratic delays in Brussels over the IPTO sale.

PPC needs to make debt and interest payments totaling 850 million euros in 2017. The utility also faces payments amounting to 650 million euros for contracted investments.

Besides needing to deal with a gigantic sum of unpaid receivables from consumers, PPC has also been forced to adjust to the negative impact on revenues caused by the recently introduced bailout-required NOME auctions, offering independent traders access to the utility’s low-cost carbon-fired and hydropower sources.

 

Genop legal action threatens SGCC deal for IPTO’s 24%

The state-controlled power utility PPC’s main union group Genop, reacting against a split-and sale plan for the subsidiary power grid operator IPTO, now in progress, is taking legal action against the Greek State at the European Court of Human Rights in Strasbourg in an effort to protect worker ownership claims to company assets.

The union group intends to argue that no reference was made to these alleged ownership rights by the Greek State when IPTO’s 24 percent was placed for sale as part of a bailout-related plan.

Genop believes PPC workers possess ownership rights to PPC assets as a result of social security fund contributions made over the years.

China’s SGCC (State Grid Corporation of China) has agreed to acquire a 24 percent stake of IPTO. Ultimately, the legal action taken by Genop comes as a direct challenge against SGCC’s agreement for IPTO’s 24 percent.

The sale is approaching finalization. A 25 percent stake of IPTO still needs to be transferred to the Greek State, which, according to the split-and-sale plan agreed to by the government and the country’s lenders, will end up with a 51 percent stake of IPTO. A holding company carrying the remaining stake also needs to be listed on the bourse.

If Genop’s case against the Greek State is accepted at the European Court of Human Rights, then such a development would delay the tight IPTO sale schedule and trigger a clause included in the agreement with lenders for IPTO’s sale in its entirety.

Taking into consideration the possibility of IPTO being sold entirely, certain Genop sub-groups have refused to officially support the union in its decision to resort to legal action.

 

IPTO sale process may trouble PPC-CMEC power station plan

The main power utility PPC’s plan to forge a partnership with China’s CMEC (China Machinery Engineering Corporation) for the development of Melitis II, a prospective lignite-fired power station of strategic importance in Greece’s north, could be jeopardized by the ongoing approval process required in Athens and Brussels for the power grid operator IPTO’s new company standing following an agreement with another Chinese firm, SGCC (State Grid Corporation of China), to acquire a 24 percent stake in the operator, a PPC subsidiary amid a bailout-required process of breaking away from its parent company.

Both CMEC and SGCC are essentially controlled by one owner, the Chinese State. This could potentially prompt the European Commission’s Directorate General for Competition to intervene on the IPTO certification process as a DG Comp regulation specifies that operator shareholders cannot hold any interests in the supply or production of electricity.

Taking this regulation into consideration, CMEC could ultimately decide to not invest in the Melitis II project.

At this point in time, there is no direct connection between the IPTO certification process and the Melitis II project as the latter is still being examined as an investment prosect by CMEC.

As for the IPTO certification process, RAE, the Regulatory Authority for Energy, has just offered its preliminary approval following an examination on whether the SGCC acquisition agreement for a 24 percent stake of the operator complies with EU criteria. The European Commission will also need to endorse the ownership unbundling procedure before RAE finalizes its approval.

The European Commission is entitled to take up to two months to deliver its decision. If this time is fully utilized, the IPTO split-and-sale process, which has already fallen behind on its tight bailout-related schedule, could be further delayed.

Theoretically, this delay could trigger action for the entire sale of IPTO in place of the current plan, through which the Greek State is expected to end up with a 51 percent stake of the operator. However, the delay, not extensive, is expected to be absorbed.

 

 

IPTO certification for SGCC deal expected within 10 days

Certification needed by power grid operator IPTO to complete the sale of a 24 percent stake to SGCC’s (State Grid Corporation of China) is expected to be issued by RAE, the Regulatory Authority for Energy, within the next ten-day period.

IPTO’s package of needed certificates must be assessed by March 31, a bailout-related deadline.

Two matters being examined by RAE – the first being the operator’s independence in its new life away from its parent company PPC, the main power utility, the other whether SGCC satisfies European Commission criteria – both appear unlikely to trouble the certification process.

Despite not acquiring a majority stake of IPTO, the Chinese company needs to meet certain EU criteria as a non-EU investor. SGCC has already been granted European certification as the Chinese company holds a stake in Portuguese energy company EDP, which simplifies IPTO’s task.