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.

PPC racing against time for IPTO sale, concerns growing

The main power utility PPC is racing against time to list a power grid operator IPTO holding company on the bourse by May, a bailout requirement included in the split-and-sale plan for the operator, a utility subsidiary.

According to sources, a plan of the prospectus for the prospective listing of the holding company, to carry a 51 percent stake of IPTO, has already been presented to the Hellenic Capital Market Commission (HCMC).

A finalized prospectus will be established as soon as PPC has posted its financial results for 2016. If the listing’s prospectus were to be finalized now, PPC would need to base it on the corporation’s most recently published financial results, meaning the nine-month results for 2016.

Sources closely connected to the IPTO sale procedure told energypress that the objective is to have finalized both the holding company’s bourse listing and split from PPC within May.

PPC, the operator’s parent company, is looking forward to receiving funds from the sale of a 24 percent share of IPTO to SGCC (State Grid Corporation of China) as well as the sale of a 25 percent stake to the Greek State. The total payment expected from these two sources, estimated at over 620 million euros, promises to offer financial relief to PPC, burdened by a poor cash flow.

In more recent times, market officials have expressed growing concern over the IPTO sale’s prospects, fearing its possible collapse, as was the case with the long-running attempt to sell a 66 percent stake of DESFA, the natural gas grid operator, to the Azerbaijani energy firm Socar, with Italy’s Snam as a partner.

The European Commission’s Directorate General for Competition had intervened on the DESFA sale, citing competition concerns. The DG Comp demanded that the Azerbaijani company surrender a portion of the majority DESFA stake it had agreed to acquire and become a minority partner in the deal.

With China’s SGCC set to become involved in IPTO’s future management decisions, Brussels appears to be examining the introduction of protective measures that would prevent aggressive takeovers by Chinese firms, subsidized by the Chinese State to outbid rival buyers in tenders.

PPC and the Greek government would want to have pressed ahead with the IPTO sale prior to the implementation of any such restrictive measures by Brussels.

 

 

 

 

Foreign bank, SGCC positions unclear in IPTO sale plan scare

A threat that came close to derailing the government’s split-and-sale plan for IPTO, the power grid operator, a subsidiary of PPC, the main power utility, last Friday night, following concerns raised by the country’s four main banks over financial guarantees, now appears to be under control, but questions still linger.

The four banks reached an agreement with the government after deeming that the fulfillment of three guarantees set on Friday would not require the banks to block the IPTO split-and-sale procedure.

According to energypress sources, the four banks will be granted PPC contracts that promise to generate future cash flow; PPC loans will be transferred to IPTO’s SPV (Special Purpose Vehicle); and amounts owed by the Greek State to PPC will be swiftly settled in order to enable the utility to service its bank loans.

It is not yet clear whether other PPC creditors, including the European Investment Bank and funds, are satisfied with the agreement reached between the government and the country’s four main banks.

It is also unclear to what degree these guarantees set by the four main banks impact the 320 million-euro price tag of SGCC’s (State Grid Corporation of China) agreement with PPC for the acquisition of a 24 percent stake of IPTO.

The interest will now focus to PPC’s general shareholders meeting scheduled for tomorrow. Facing a tight schedule, set as part of the bailout, the government’s IPTO split-and-sale plan has developed into a more complicated project than originally anticipated.

The government’s plan entails keeping 51 percent of IPTO under the Greek State’s control. If the country’s creditors deem that the procedure is not progressing as planned, PPC will be forced to sell IPTO in its entirety.

 

 

 

IPTO holding company mystery postponement sparks rumors

The state privatization fund TAIPED’s request yesterday for the postponement of a decision establishing a holding company that would take on a 51 percent share of IPTO, the power grid operator, as part of the operator’s complex sale procedure, strongly suggests that the sale effort has run into serious trouble, despite the fund’s attempt to play down the development by describing it as a procedural issue.

A series of meetings were held during the day between government, TAIPED, main power utility PPC officials, and advisers to resolve the issue. PPC is IPTO’s parent company.

The tight IPTO sale schedule gives officials until January 17, when a PPC shareholders meeting is planned, to resolve the issue, but, despite the alarm, a solution may be found as early as today.

Yesterday’s postponement, made during a PPC shareholders meeting, has sparked much speculation.

Though considerable progress has already been achieved in the IPTO sale – as highlighted by the choice of China’s SGCC as the winning bidder of an international tender offering a 24 percent stake in IPTO, and an agreement reached with the country’s lenders for the sale’s schedule – PPC appears to have certain doubts.

Even so, yesterday’s postponement is not believed to be linked to a counterproposal made by PPC’s chief executive Manolis Panagiotakis for the subsidiary IPTO’s split and sale plan.

According to an agreement reached by the government and the country’s lenders, PPC is expected to transfer a 51 percent share of IPTO to a holding company whose equity capital, based on a company estimate, will be worth 491.8 million euros.

The Greek State and TAIPED control 51 percent of PPC – 34 percent and 17 percent respectively. The two will hold equivalent stakes in IPTO through the holding company.

The sale procedure will eventually lead to TAIPED taking control of an 8.5 percent of IPTO, a prospect that has raised the concerns of PPC union members and the administration. They fear that the government’s objective of retaining 51 percent of IPTO for the Greek State could easily be derailed.

 

 

 

Bulgarian nuclear power station promises wider market impact

The energy crisis affecting Greece and the wider region over the past few days, prompted by the increase in electricity demand amid freezing temperatures, has brought to the fore a number of important issues and prospects that promise to redefine the area’s energy map.

The prospect of the development of an additional nuclear power station in neighboring Bulgaria in the near future, which now appears likelier than ever before, would certainly bring about changes to the wider region’s energy market.

Such a development would permit Bulgaria to meet its domestic energy demands with far greater ease and export even greater electricity quantities.

The regional importance of a new Bulgarian nuclear power station – which would come as an addition to the country’s only other such facility in Kozloduy, northern Bulgaria, currently the biggest in the wider region – was made clear by the energy crisis of the past few days.

Greece was forced to interrupt electricity exports today, while a Bulgarian request for increased electricity imports from Romania on Monday was rejected as officials in Bucharest focused on meeting domestic electricity demand. Record electricity demand levels were struck in both Romania and Bulgaria.

It is no surprise that the European Union has turned its attention to matters concerning transboundary interconnections as part of the effort to integrate the European electricity market and also bolster energy security in the continent.

Assuming a new Greek-Bulgarian interconnection project goes ahead as intended, an additional nuclear power station in Bulgaria would enable greater amounts of low-priced electricity to be imported into Greece from the neighboring country.

Greece’s main power utility PPC, currently seeking to bolster its electricity trading activity in the wider region, an effort that would involve its Bulgarian subsidiary, can look forward to greater business prospects if a second Bulgarian nuclear power is developed.

China’s SGCC, which was recently declared the winning bidder of an international tender offering a 24 percent stake of Greek power grid operator IPTO, a PPC subsidiary, has made clear its intentions to upgrade IPTO’s role in the international interconnections game.

Bulgaria’s political leadership now needs to decide whether the country requires an additional nuclear power station.

 

 

IPTO equity revision for still needs to be endorsed by creditors

Despite the successful recent transfer of a 24 percent stake of main power utility PPC’s subsidiary firm IPTO, the power grid operator, to China’s SGCC, the utility’s boss Manolis Panagiotakis has seemed uneasy in public comments, noting that other crucial obstacles still need to be cleared.

According to energypress sources, Panagiotakis is concerned about the details of the procedure entailing the establishment and listing of a holding company to control 51 percent of the new IPTO. Creditors and suppliers of the current IPTO still need to give the green light for the new company’s establishment.

Though no major obstacles have emerged to date, the overall procedure must be completed by March, as demanded by the bailout agreement.

Creditors such as banks, suppliers and sub-contractors owed amounts by IPTO in its current form still need to permit the operator’s equity make-up revision enabling it to transform into an enterprise in which the Greek State will hold a 51 percent stake, SGCC 24 percent and bourse investors 25 percent. IPTO, until recently wholly owned by PPC, is currently controlled by the utility with a 76 percent stake, while SGCC holds a 24 percent stake.

Just days ago, the PPC’s boss informed that a 319 million-euro amount to be provided by the Greek State for its acquisition of IPTO’s 51 percent will be paid in cash to the utility, adding that an offsetting solution will not be resorted to. Prior to this update, it had been widely believed that the Greek State would not be in a position to make a cash payment.

Despite the overall concerns, PPC’s administration is confident the process will be successfully completed.

 

 

SGCC, buyer of IPTO’s 24%, nurturing wider ambitions

China’s SGCC, the winning bidder of a recent international tender offering a 24 percent stake of Greek power grid operator IPTO, a main power utility PPC subsidiary, has adopted a strategic decision to reinforce, in all ways possible, its position in Europe’s electricity market developments, officials at PPC, IPTO and RAE, the local Regulatory Authority for Energy, have understood in a series of meetings held with Chinese officials, currently in Athens to sign a deal today for the IPTO sale.

The Chinese electric utility company, a global giant, sees major prospects in the European market. Its 24 percent acquisition of IPTO is seen as a stepping stone for more ambitious moves to be taken around the continent.

According to energypress sources, SGCC officials have made clear, during this visit to Athens, the coorporation’s intentions to participate in electricity network reinforcement projects in the Balkans and southeast Europe, as well as even bigger projects, such as the Africa-Europe interconnection, which they anticipate will be developed within the next few years. IPTO could play a role, even if only small, in these projects, the SGCC officials noted.

Returning to domestic energy matters, the Chinese officials believe that the country’s planned interconnection projects, such as the mainland’s link with Crete, will be developed “easily” and “swiftly”.

This may seem a little overambitious for local pundits but the scale of SGCC should not be overlooked. The corporation provides energy services to an estimated 1.5 billion consumers, has installed roughly 320 million digital power meters and is backed by a particularly advanced R&D division.

 

Swift progress needed for IPTO sale; SGCC officials in Athens

European Commission certification issues concerning the split of IPTO, the power grid operator, from parent company PPC, the main power utility – for the sale of a 49 percent stake of the operator to private-sector investors, including a 24 percent share to SGCC, the State Grid Corporation of China, the winning bidder of a recent international tender – will need to be dealt with swiftly and efficiently if the sale procedure is to remain on track.

Certification procedures, a key part of the sale, will need to be finalized, or have hit the final stretch with all maters resolved, by the end of March.

A number of officials believe the target date set by Greece’s lenders is not attainable.

As recently highlighted by Greece’s failed attempt to sell a 66 percent share of DESFA, the natural gas grid operator, certification issues are crucial to the chances of this sale’s success.

In the case of IPTO, certification procedures are expected to be less challenging as the Chinese energy giant SGCC, the strategic investor expected to acquire 24 percent of IPTO in the sale’s first stage before a further 25 percent is offered to investors through the bourse, has already secured EU certification as a result of its stake held in Portuguese firm EDP.

The main priority at this stage is to establish a holding company to be listed on the bourse. Consulting firm Deloitte has already begun work on complex technical aspects linked to IPTO’s bourse listing.

SGCC officials are currently in Athens to work on various matters concerning the 24 percent acquisition of the Greek operator.

If the attempt to privatize a 49 percent share of IPTO fails, then PPC will need to sell its entire 100 percent share of the operator.

PPC, DEPA meetings two steps towards new-look sector

The coinciding general shareholders meetings today at main power utility PPC and DEPA, the Public Gas Corporation, symbolize, in a sense, concurrent developments in the electricity and natural gas markets that are leading the country towards a new-look energy sector.

At PPC, barring no unexpected developments, shareholders are expected to approve the recent announcement of SGCC, the State Grid Corporation of China, as the prefered strategic investor of an international tender offering a 24 percent stake of Greece’s power grid operator IPTO, until now a wholly owned PPC subsidiary. SGCC emerged as the winning bidder with a 320 million euro offer.

Based on the sale plan, the prospective buyer will need to submit a six-month letter of guarantee of 20 million euros. Also, in 2017, PPC will be the recipient of dividends to be distributed by IPTO for the 2016 financial year. These will be worth 35 percent of IPTO’s net profit.

Another clause in the sale agreement specifies that a 5 percent surcharge will be added to the 320 million euro sale price if the transfer of shares from IPTO to SGCC is not completed within 2017. If needed, a further 4 percent will be added for 2018.

Also, SGCC will not have the right to transfer its stake in IPTO for a two-year period.

The sale’s terms also obligate IPTO to pay PPC of 131 million euros minus taxes as a cash upstream payment, which, according to sources, represents a return of capital as a result of the capitalization of fixed assets at IPTO.

At the DEPA meeting, also today, shareholders are expected to endorse the natural gas distribution division’s split from the corporation as a step towards establishing a new wholly owned subsidiary to handle natural gas distribution to new networks in urban centers such as Halkida, Lamia, Thebes and Livadia, whenever the required infrastructure in these regions is developed.

The new DEPA subsidiary will be granted full independence. The parent company will not have a say in its administrative matters, including choice of board.

Ultimately, once all distribution activity is taken away from DEPA, the parent company will focus on matters such as supply, trade and international contracts.

 

 

IPTO’s state control threatens investment plan, worker rights

The imminent status shift of IPTO, the power grid operator, from a main power utility PPC subsidiary firm to an enterprise under direct Greek State control, will inject uncertainty into the operator’s investment plan and various worker rights.

The change stands to be made official next week, when the sale of a 24 percent stake of IPTO to SGCC, the State Grid Corporation of China, through its subsidiary firm State Grid International Development, is expected to be endorsed at a scheduled PPC shareholders meeting.

IPTO’s ambitious investment plan is estimated to be worth around 5 million to 6 million euros. It includes projects of pivotal national importance, especially the Crete interconnection, its extension covering the Dodecanese islands, and on an international scale, an interconnection project planned to link Greece’s grid with the systems in Cyprus and Israel.

These interconnection projects are directly linked to an objective entailing a drastic reduction of the Public Service Compensation (YKO) surcharge included on electricity bills to cover costs such as Crete’s aging and inefficient mazut and diesel-fueled stations used to generate electricity. The overall cost of electricity would be lowered.

Development of the interconnection projects also promises to utilize the rich renewable energy (RES) potential of areas such as Crete and the Dodecanese islands while also providing energy stability and security for these leading Greek tourism destinations.

IPTO’s investment plan has faced challenges even under the control of PPC, which, up until a few years ago, did not face serious borrowing restrictions in domestic and international money markets. More recently, the utility’s current cash flow problem has seriously affected its borrowing ability. Of course, interconnection projects such as the Cretan plan would easily attract capital from institutions such as the European Investment Bank (EIB), while the establishment of partnerships with private-sector firms is another option.

IPTO’s move away from PPC to Greek State control also threatens various employee benefits such as bonus payments.

 

 

PPC officials reject ex-minister’s role in €1bn inflow prospect for 2017

Main power utility PPC has secured cash inflow of one billion euros for 2017 as a result of his actions, the just-replaced energy minister Panos Skourletis remarked during yesterday’s swearing-in ceremony for his successor, Giorgos Stathakis.

The remark raised eyebrows, including among highly-ranked PPC officials who attended the ceremony. PPC’s chief officer Manolis Panagiotakis, whose ties with Skourletis had deteriorated, primarily over bailout-related measures seeking to reform and liberalize Greece’s electricity market, did not show up.

The former energy minister’s reference to the one billion-euro figure concerns an expected inflow from various fronts. PPC is expected to receive 320 million euros for the sale of 24 percent of subsidiary firm IPTO, the power grid operator, to SGCC, the State Grid Corporation of China. The Chinese giant emerged as the IPTO tender’s highest bidder less than a fortnight ago.

PPC also stands to receive roughly 300 million euros from the transfer of a further 25 percent of IPTO to the Greek State as well as about 150 million euros for the capitalization of reserves.

The utility also expects a 100 million-euro deposit payment from Aluminium of Greece as part of a new tariff agreement just reached.

In addition, it is estimated that PPC will receive approximately 150 millin euros in fees from NOME auctions.

PPC officials at the ceremony refused to give Skourletis full credit for all these aforementioned amounts, both publically and on the sidelines. The only fresh money created during his tenure is the 320 million-euro amount to come from from SGCC for IPTO’s 24 percent, the PPC officials agreed. All other amounts were pre-determined, they added.

SGCC, winning IPTO bidder, gearing up for massive global energy project

Main power utility PPC’s agreement to sell 24 percent of subsidiary firm IPTO, the power grid operator to SGCC, the State Grid Corporation of China, through its wholly owned subsidiary firm State Grid International Development, could well lead to global prospects well beyond PPC’s intention to penetrate Balkan and other neighboring markets.

PPC’s association with SGCC, the world’s biggest player in international electricity markets, promises to bring the utility in touch, even if indirectly, with the Chinese energy giant’s interest in a Global Energy Interconnection (GEI), a plan entailing the transfer of power production through long-distance interconenctions covering the entire world. For example, power output generated at solar power parks along the equator and at wind-energy parks in the Arctic region, around the North Pole, may be supplied to meet demand in Asia, Africa, Europe and the Americas.

Though this plan may appear somewhat futuristic, it is being approached as a realistic objective project by SGCC.

The project’s development has been divided into three stages. The first, a preliminary stage entailing the promotion of eco-friendly energy use, is planned to run until 2020. A target of 2030 has been set for the second stage, concerning the completion of interconnection infrastructure and major energy hubs. The aim is for investors to have completed this ambitious project’s third and final stage, entailing the development of major-scale solar facilities along the equator and wind energy parks in the Arctic region, by 2050.

If compeleted, the project is expected to cover 80 percent of global power needs through eco-friendly electricity production. SGCC’s president and CEO Liu Zhenya (photo), has noted that the 2050 completion target and estimated coverage of global electricity needs are both realistic objectives.

According to SGCC estimates, the GEI plan will require roughly 50 trillion dollars to set up. The Chinese giant is currently exploring the prospect of teaming up with co-investors. These include Softbank, Korea Electric Power and Rosetti PJS. The plan has already been presented at the World Economic Forum. SGCC has set up a company named GEIDCO (Global Energy Interconnection Development and Cooperation Organization) to focus on the ambitious project.

Returning to the agreement between PPC and the SGCC subsidiary for IPTO’s 24 percent, it was endorsed yesterday by the Greek utility’s board but still needs to be approved by PPC shareholders at an extraordinary shareholders meeting scheduled for November 24.

PPC board to endorse SGCC’s IPTO bid, payback extension

The board at PPC, the main power utility, is today expected to officially declare SGCC, the State Grid Corporation of China, as the preferred bidder of an international tender offering a 24 percent stake of its subsidiary firm IPTO, the power grid operator.

SGCC offered 320 million euros for IPTO’s 24 percent, an amount believed to have exceeded an independent evaluation conducted by Barclays. Its outcome has yet to be disclosed.

The power utility’s board, seeking to improve its cash flow, will also decide today to extend the duration of its softened payback program for consumers with arrears, enabling repayment of unpaid bills over 36 installments without any deposit, sources informed.

A finalized decision on the IPTO sale will be made at the utility’s next general shareholders meeting, scheduled for November 24. If all goes well, IPTO’s new minority shareholder will be granted administrative rights early in 2017. The details of these rights will be determined during negotiations between the two sides for the establishment of a share purchase agreement and a shareholders agreement.

Talks held with SGCC officials so far have suggested the Chinese company is mostly interested in matters concerning the operator’s financial management and investment program. A number of pundits believe SGCC will seek to appoint officials in the operator’s financial management and supply departments.

PPC will concurrently pursue a plan leading to the sale of 25 percent of IPTO through the bourse and transfer of 51 percent to the Greek State.

 

China’s SGCC offers highest bid, €320m, for 24% of IPTO

SGCC, the State Grid Corporation of China, has produced the highest bid, 320 million euros, for a 24 percent stake of IPTO, the power grid operator, in an international tender staged by the operator’s parent company PPC, the main power utility, the latter has announced.

PPC’s board is now expected to declare SGCC as the preferred bidder on October 31 before the Chinese company’s acquisition is made official at the utility’s upcoming general shareholders meeting, scheduled for November 24.

Italy’s Terna also submitted a binding bid, while France’s RTE, the other qualifier through to the final stage, opted to withdraw.

The Greek government appears satisfied with the price level achieved following the IPTO sale procedure’s drastic revision, engineered by the current energy minister Panos Skourletis, who cancelled the previous administration’s plan to sell 66 percent of the operator.

Instead, he restructured the sale, offering 24 percent of IPTO to a strategic investor as the procedure’s first step, now being completed. A further 25 percent of the operator is planned it be sold through the bourse, while 51 percent will be transferred from IPTO to the Greek State.

A comparison of the two sale plans indicates that the new version has produced a better deal for Greece. Based on an evaluation of IPTO conducted during the previous plan’s sale attempt, 24 percent of the operator is worth 221 milllion euros, given the 921 million-euro value set for all of IPTO. Taking this into account, the 320 million-euro binding bid submitted by SGCC for 24 percent of IPTO is a good offer. Of course, clearer judgement will be made possible when the result of an independent evaluation, conducted by Barclays, is disclosed.

Once the preferred bidder is officially announced, the next step will be to finalize a Share Purchase Agreement and a Shareholders Agreement. The sale is expected to be completed early in 2017, when follow-up procedures for the privatization of a 17 percent stake of PPC are scheduled to commence.

 

China’s interest in local energy sector, ubiquitous, a strategic choice

The Chinese factor in Greek energy sector developments has gained ground over the past few days. Chinese interests are at play, both directly and indirectly, as part of the country’s strategic energy interest here.

Zhang Chun, president of CMEC (China Machinery Engineering Corporation), who headed a Chinese delegation to Athens, yesterday signed a strategic agreement with main power utilty PPC’s chief executive Manolis Panagiotakis.

Last Friday, SGCC, the State Grid Corporation of China, was one of two investors to submit a binding bid for a 24 percent stake of IPTO, the power grid operator. Italy’s Terna was the other bidder.

This trend of a growing Chinese presence in Greek energy matters appears likely to continue. Certain pundits believe that SGCC will not only be named the prefered bidder for IPTO’s 24 percent, but will also significantly shape the future development of the operator as well as its parent company PPC.

Interestingly, a closer look at the IPTO tender reveals that SGCC is also a part of the Terna bid. In November, 2014, SGCC acquired a 35 percent stake of Cassa Depositi e Prestiti Reti (CDP Reti), an Italian holding company, from Cassa depositi e prestiti Spa. CDP Reti holds a 29.85 percent stake in Terna. Yupeng He, is a member of CDP Reti’s board as an SGCC representative. Simply put, Terna’s rival bidder for IPTO’s 24 percent holds a stake in Terna.

SGCC is also linked to Greece’s long-running sale effort offering a 66 percent share of DESFA, the natural gas grid operator. Azerbaijani energy firm Socar, which appears set to finalize a deal for the DESFA sale with the Greek government, will need to cut at least 17 percent from a 66 percent DESFA stake it is entitled to, as the winning bidder of a 2013 tender, following intervention from the European Commission. Italy’s Snam is expected to take on Socar’s surrendered amount. It could exceed 30 percent. CDP Reti, in which SGCC holds a 35 percent share, owns 30 percent of Snam.

Italy’s Terna, China’s State Grid submit offers for IPTO’s 24%

Two of three candidates, China’s State Grid International Development and Italy’s Terna, have submitted binding bids for a 24 percent stake of power grid operator IPTO, currently a wholly owned subsidiary of main power utility PPC, energypress sources have informed. France’s RTE did not make an offer, the sources added.

The sale’s deadline for binding bids expired today following an extension from October 19 to October 21.

Today’s developments confirm an energypress report yesterday tipping Terna and China’s State Grid International Development as the procedure’s favorites.

The two bids and an independent evaluation of IPTO, conducted by HSBC, will be opened up and examined concurrently next week. The amounts offered by the two candidates, both formidable players, remain to be seen.

According to sources, the prospective buyers will be asked to improve their offers if their bids fail to cover the amount specified in HSBC’s evaluation of IPTO’s market worth.

A preferred bidder is expected to be announced next week or no later than October 31, while contracts concerning the deal will be signed in November.

The IPTO sale faces an extremely tight schedule. If the country’s creditor representatives deem that unsatisfactory progress is being made by the current IPTO sale plan, proposed by the Greek government, then the operator will need to be sold entirely.

Binding bids deadline for IPTO’s 24% expires tomorrow

Prospective buyers of a 24 percent stake of IPTO, the power grid operator, will need to submit their offers by tomorrow, the sale’s deadline for binding bids.

The procedure’s schedule, a bailout requirement, is tight. A preferred bidder will need to be selected no later than October 31. Then, by the beginning of 2017, Greek officials will need to offer a further 25 percent of IPTO to investors through the bourse and transfer of a 51 percent stake from main power utilty PPC, the operator’s parent company, to the Greek State.

On the eve of the binding bids deadline, Italy’s Terna and China’s State Grid appear to be the favorites for IPTO’s 24 percent. As for France’s RTE, the third candidate, pundits believe the company will either not submit a bid or make a non-competitive offer.

Officials estimate that a sum of as much as 250 million euros represents a fair price to pay for IPTO’s 24 percent. Surprises that could go either way cannot be ruled out.

 

IPTO evaluation result next Friday, on binding bids deadline day

The results of an independent evaluation of IPTO, Greece’s power grid operator, being conducted by Barclays are expected to be delivered next Friday, a date coinciding with the binding bids deadline for prospective bidders participating in an ongoing international tender for a 24 percent stake of the operator, currently a wholly owned subsidiary of PPC, the main power utility.

PPC will not accept anything less for IPTO’s 24 percent than the figure to eventuate from the evaluation.

Three strategic investors, Italy’s Terna, France’s RTE and China’s State Grid International Development have qualified for the international tender’s second round, involving binding bids. The deadline for bids expires on October 21. Local authorities added a further two days to a preceding one-week extension. The new deadline for bids coincides with the evaluation’s delivery date.

At this stage, China’s State Grid International Development appears to be the most interested of the three candidates – in terms of enquiries and proposals being made, both for the tender’s conditions and the operator’s future plans.

Both PPC and IPTO officials believe that if the Chinese firm decides to submit a binding bid for the Greek operator’s 24 percent, its price will be insurmountable.

Despite being interested in IPTO as part of a wider regional strategy, Italy’s Terna has noted its bid will reflect the sale’s actual commercial prospects. The firm does not want to unsettle its own financial standing or shareholder interests.

Though France’s RTE was recently engaged in talks with Hydro-Quebec, a Montreal-based global powerhouse, for a possible joint bid, the two sides did not reach an agreement. As a result, the French company will most likely not make a binding offer.