SGCC

Chinese officials to table widespread energy investment interest

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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

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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

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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

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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%

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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

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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

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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

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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

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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

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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.

 

PPC doubts €137m tax bill linked to IPTO split from utility

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The main power utility PPC plans to request the cancellation and recalculation of a 137 million-euro tax bill imposed on the power utility and due this year as it believes the sum, linked to the power grid operator IPTO’s split from the parent company, is excessively oversized.

By questioning this amount PPC is, in effect, also casting doubts over the procedure implemented for IPTO’s split from the utility.

The power utility needed to surrender its full ownership of the power grid operator but was only compensated for a 49 percent stake sold to the Greek State and China’s SGCC. The Chinese firm acquired a 24 percent stake in IPTO last year. The other 51 percent – factored into the tax equation – was transferred to shareholders for free, without any cash inflow, the power utility contends.

Despite only receiving an amount for the 49 percent share of IPTO sold to the Greek State and SGCC, the power utility was taxed for the full 100 percent value of the operator, the power utility contends.

PPC received 320 million euros from SGCC as well as three separate amounts from the Greek State, 330 million euros, 295.6 million euros, and a further 93 million euros as a return of capital.

PPC’s total tax bill for the current year is worth approximately 350 million euros, including the IPTO-related 137 million euros being disputed by the power utility, or nearly 40 percent of the utility’s total tax obligation for the year.

 

IPTO reports net profit surge, up 113% to €31.2m in 1Q

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IPTO, the Greek transmission system operator, has posted a first quarter net profit of 31.2 million euros, up 113 percent increase compared to the 14.6 million-euro figure reported for the equivalent period a year earlier.

First-quarter operating profit at IPTO rose by 69.4 percent to 47.3 million euros from 27.9 million euros in the first quarter a year earlier, the operator reported.

Total revenues at IPTO fell to 56.7 million euros in the first quarter from 65.5 millon euros a year earlier, a 13.5 percent decline, it reported.

Revenue from Transmission System Rent also slipped in the first quarter, dropping 12.8 percent to 53.3 million euros from 61.1 million euros.

IPTO’s net debt figure fell by 32.7 percent to 157.7 million euros from 234.4 million euros.

The recently established ADMIE Holding SA, owner of a 51 percent stake of IPTO, reported a first-quarter net profit of 15.8 million euros.

IPTO’s first quarter results were positively affected by the ad hoc provision of 26.6 million euros following a Court Decision that dismissed the lawsuit of a contractor, the operator noted.

IPTO’s management, in close cooperation with ADMIE Holding and strategic investor State Grid International Development, is committed to the timely execution of one billion euro transmission system investments on a cumulative total until 2021, it stated.

A plan accelerating investments is in place. Commissioning of the 1st Phase of the Cycladic islands interconnection, worth 247 million euros, has been completed. IPTO has accelerated Phase 3 of the Cyclades Interconnection with the relevant tenders to be published during June. Phase 2 of the Cyclades Interconnection is underway with the selection of the tenderer for the undersea cable that will connect Naxos with Paros and Mykonos, the project’s budget being 42 million euros.

Furthermore, the interconnection of Crete with the Peloponnese has been launched with the publication of tender documents for the construction of the undersea cable connecting Peloponnese with Crete and the two substations at both ends of the cable.

IPTO has also submitted to RAE, the Regulatory Authority for Energy, its proposal for the interconnection of the Dodecanese, paving the way for a new major island interconnection project, the operator noted.

In April, IPTO completed successfully a voluntary exit scheme, with the participation of 136 employees eligible for retirement rights. The resulting reduction of the annual payroll cost is estimated at 8.5 million euros per annum, the operator noted.  Furthermore, the aforementioned scheme offers the company the opportunity to hire new recruits, it added.

 

State energy firm hirings freed from civil staff council limits

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A legislative revision submitted to parliament yesterday by a governing Syriza party MP will enable state-run energy enterprises joined by strategic investors as minority partners to appoint managerial staff directly through the labor market, free of any  constraints related to hirings carried out via ASEP, the Supreme Council for Civil Personnel Selection.

The revision is necessary as the country’s energy sector is being reshaped by privatizations and the arrival of new strategic partners demanding managerial representation.

IPTO, the power grid operator, which was recently joined by State Grid Corporation of China (SGCC) as a strategic partner, now holding a 24 percent stake, has agreed to offer key managerial posts to SGCC officials.

This managerial arrangement, agreed to between the Greek State and SGCC, a minority partner, would not have been possible without the legislative revision.

Strategic investors aiming to acquire minority stakes in other prospective Greek energy sector privatizations will also benefit from the legislative revision as they will be permitted to seek qualified managerial staff of their choice in the wider labor market.

Strategic investors who stand to acquire majority stakes in state-run energy firms have the right to appoint managerial staff of their liking, regardless of the legislative revision.

Snam, Enagas and Fluxys have been declared the preferred bidding team in an international tender offering a 66 percent stake of DESFA, Greece’s natural gas grid operator. An ELPE (Hellenic Petroleum) privatization, still at an early stage, is offering investors a 50.5 percent stake. The prospective majority shareholders at DESFA and ELPE will be free to decide on managerial appointments regardless of the legislative revision.

However, management-level recruits at the main power utility PPC, still controlled by the Greek State with a 51 percent stake, continue to be made through ASEP, the civil personnel selection body. The revision will enable PPC management posts to be filled free of any ASEP intervention when a stake of the power utility is eventually privatized.

Also, strategic investors to acquire stakes in two forthcoming DEPA (gas utility) subsidiaries controlling the enterprise’s distribution networks and commercial matters, will be able to pick personnel from the wider market.

 

 

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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.