Gas network upgrade cost in north crucial for UGS sustainability

The cost of reinforcing the gas network in northern Greece, a key component to the financial sustainability of a project entailing the development of an underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, has been discussed at an energy ministry meeting involving officials of RAE, the Regulatory Authority of Energy, gas grid operator DESFA and the privatization fund TAIPED.

Officials are seeking full clarity on the level of investments needed for the gas network in northern Greece so that natural gas can be transported to and from the prospective UGS.

According to DESFA, the country’s gas grid operator, northern Greece’s gas network now requires an upgrade as the prospect of a UGS facility was completely unanticipated when the region’s grid was initially designed and developed.

DESFA-GEK TERNA and Energean Oil & Gas have advanced to the second round of a project tender staged by TAIPED.

Major investment interest in PPC equity capital increase

Power utility PPC’s equity capital increase, planned for late October, is expected to attract over one billion euros, in excess of the 750 million-euro amount initially announced, strong interest by foreign institutional investors, including major US interest, as well as dozens of meetings lined up for the coming weeks with potential participants, has indicated.

The next fortnight or so is expected to be filled with non-business news concerning PPC’s equity capital increase, the related topics to include discussion on possible participants, as well as political debate over the equity capital increase, effectively a partial privatization that will result in a decrease of privatization fund TAIPED’s current stake in the company from 51 percent to 34 percent.

The development promises to free the utility from restrictions imposed on state-controlled companies, boost its finances and enable the company to further consolidate its position as the dominant market player. Small and big energy players are expected to be impacted by the PPC move. Talk of takeovers is already brewing.

The equity capital increase, along with PPC’s not-yet-finalized sale of a 49 percent stake of distribution network operator DEDDIE/HEDNO, a subsidiary, to Australian fund Macquarie for 2.116 billion euros, will offer crucial financial support for PPC’s 8.5 billion-euro investment plan covering the next five years. Green energy production and ventures abroad are the plan’s key objectives.

PPC chooses FMO for equity capital increase, more potential

Power utility PPC’s equity capital increase, announced last Friday, will be staged as a free market offer (FMO) procedure with accelerated book building, meaning that the discount at which the equity capital increase will be held will be determined by the offers to be submitted to the issue’s book.

Also, PPC will be able to announce a bigger equity capital increase should oversubscription be achieved.

The administration’s decision to opt for an FMO procedure rather than a customary method of pre-determined prices is expected to create competition among participants, which could produce a better result, both in terms of the discount and funds to be drawn, officials explained.

PPC will be able to revise, upwards, its 750 million-euro equity capital increase if the procedure is oversubscribed, the officials added.

The power utility’s administration began talks with prospective participants of the equity capital increase last Friday and will continue these talks until the end of October, when the book building procedure will commence.

PPC is aiming to attract 750 million euros. The procedure will result in a decrease of privatization fund TAIPED’s current stake in the company from 51 percent to 34 percent.

 

 

PPC planning equity capital increase, big funds involved

Power utility PPC will proceed with a 750 million-euro equity capital increase, effectively a partial privatization coming twenty years after a previous round at the bourse that will result in a decrease of privatization fund TAIPED’s current stake in the company from 51 percent to 34 percent.

The company administration’s step back for a minority share, plus management, aims to maximize the participation of foreign institutional investors, who, along with local investors, are expected to easily cover the equity capital increase’s financial demands.

US, British and northern European funds are among the interested parties, private talks held over the past six months, at least, have indicated, energypress sources informed.

Blackrock, EBRD, Fidelity, Apollo, Carmignac, Twenty Four AM, Bluecrest, Pictet, Union Investments, Sona Asset Management, Barings, Aperture, Saba Capital and Vontobel are funds that could be involved, it is believed.

The equity capital increase paves the way for the influx of capital that will contribute to PPC’s 8.4 billion-euro investment plan until 2026, currently ranked as the most ambitious in the Greek market.

Besides the installation of RES units with a total capacity of 8.1 GW, PPC also aims to branch out into the Balkans, beginning with projects in Romania and Bulgaria.

Romania’s RES market is growing at an annual rate of 8 percent, the country’s objective being to reach an installed capacity of 6 GW by 2030. Bulgaria’s RES market is growing at an even greater rate, 15 percent. The neighboring country’s objective is to have installed a further 3 GW by 2030.

DEPA Comm., ELFE appeals this week, key for privatization

An Athens Court of Appeal will, on Thursday, hear three appeals submitted by gas utility DEPA and fertilizer industry ELFE following a Court of First Instance verdict in 2019 concerning an ongoing legal dispute between the two companies.

ELFE is seeking 302 million euros in compensation from DEPA, contending the gas company overpriced gas supply between 2010 and 2015.

DEPA has also filed a case seeking 86.7 million euros from the fertilizer producer, based in Kavala, northern Greece, in overdue amounts. The Court of First Instance had issued a verdict trimming this amount to 60 million euros. It is now the turn of the Athens Court of Appeal to decide.

Much attention is being paid to this case as, should it drag on, it could impact the ongoing 100 percent privatization of DEPA Commercial. In addition, a decision vindicating ELFE can be expected to also prompt other gas consumers to file overpricing cases against DEPA.

If the legal battle is prolonged, TAIPED, the privatization fund, could temporarily shelve the privatization until a final legal decision is reached. Another option being considered by the government is for the Greek State to cover any resulting compensation claims if ELFE is vindicated, as a form of guarantee for the prospective buyers.

The Greek State’s 65 percent stake is being offered by TAIPED, the privatization fund, and Hellenic Petroleum ELPE is also selling its 35 percent stake.

Big week for energy privatizations, approaching finales

It is a big week for the country’s energy privatizations with gas company DEPA Infrastructure’s tender set to reach a concluding stage tomorrow and that of distribution network operator DEDDIE/HEDNO also approaching its finale as its binding bids are scheduled to be opened on Friday.

Italgas, Italy’s biggest natural gas distribution company and the third largest in Europe, has, according to sources, submitted the highest bid in the DEPA Infrastructure sale, offering an 100 percent stake, and is the only bidder to which the privatization fund TAIPED has extended a request for an improved offer, by tomorrow.

The Italgas offer is believed to be close to 700 million euros, a figure expected to rise further, and well above an offer submitted by rival bidder EPH from the Czech Republic.

As for the privatization of DEDDIE/HEDNO, a power utility PPC subsidiary, four binding offers, for a 49% stake, have been submitted by major international funds CVC Capital Partners Group, First Sentier Investors Group, KKR Group, and the Macquarie Group. This level of participation could boost bid levels. Offers of over 1.5 billion euros, or even 1.7 billion euros, could be unveiled, sources have anticipated.

The rebounding economy, potential of Greece’s energy market, as well as the statures of all five suitors involved in the two sales could result in two of the country’s most lucrative privatization agreements, in all sectors.

Italgas, DEPA Infrastructure’s top bidder, step from acquisition

Italgas, Italy’s biggest natural gas distribution company and the third largest in Europe, is now one step away from acquiring Greece’s DEPA Infrastructure as, according to energypresss sources, it has submitted the highest bid in the DEPA Infrastructure sale and is the only bidder to which the privatization fund TAIPED has extended a request for an improved offer, by September 8.

The Italgas offer is believed to be close to 700 million euros, a figure expected to rise further, and well above an offer submitted by rival bidder EPH from the Czech Republic.

The preferred bidder may be officially announced on September 9. The sale procedure is expected to be finalized by the end of the year as national and European authorities will need to re-certify DEPA Infrastructure as a natural gas network operator under its new ownership to emerge from the sale.

The 100 percent privatization of DEPA Infrastructure comprises 100 percent of gas distributor EDA Attiki, covering the wider Athens area; 100 percent of gas distributor DEDA, representing all other areas in Greece except for Thessaloniki and Thessaly; as well as a 51 percent stake in gas distributor EDA THESS, covering the Thessaloniki and Thessaly areas.

The preferred bidder will also submit an offer for the remaining 49 percent stake in EDA THESS, based on an agreement reached between TAIPED, the privatization fund, with Italy’s Eni Gas e Luce, the current holder of this minority stake.

As a result, DEPA Infrastructure’s winning bidder stands to become the sole stakeholder in the three gas distribution companies.

Network users to cover 50% of South Kavala UGS project cost

RAE, the Regulatory Authority for Energy, has approved guidelines specifying how the development cost will be shared for an underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, thereby settling one of the main regulatory issues that remained for an ongoing tender offering use, development and operation of the facility.

According to the RAE decision, 50 percent of the project’s cost will be passed on to gas network users. As for the other 50 percent, 35 percent is expected to be covered through EU funding, assuming the project is included on the EU’s Projects of Common Interest (PCI) list, while the remaining 15 percent will be taken on by the eventual investor.

In the event that the UGS is excluded from the EU’s PCI list, the Greek State will consider becoming a project partner so that the cost for gas network users is not increased.

DESFA-GEK TERNA and Energean Oil & Gas have advanced to the second round of a project tender staged by privatization fund TAIPED.

The almost depleted natural gas field, where the UGS will be developed, is located 18 km south of the main coastline of Kavala, roughly 6 km west of the island Thasos, at a sea depth of 52 meters.

Mid-October bidding deadline for assets leased to Larco

Privatization fund TAIPED will, according to sources, set a mid-October deadline for binding bids concerning the privatization of the Larymna smelting plant, the Larymna and Loutsi mines and relevant mining rights and other assets owned by the Hellenic Republic and currently leased to “LARCO General Metallurgical & Mining Company S.A.” (LARCO).

Six interested parties are participant in the tender. These are:

  1. COMMODITY & MINING INSIGHT IRELAND LIMITED
  2. GEK TERNA S.A. – AD HOLDINGS AG
  3. MYTILINEOS S.A.
  4. SOLWAY INVESTMENT GROUP LIMITED
  5. THARISA PLC
  6. TRAFIGURA GROUP Pte Ltd

DEPA Infrastructure bidder legal files opened ahead of offers

Privatization fund TAIPED has opened first-stage files carrying legal documents submitted by two bidders, Italy’s gas network operator Italgas and the Czech Republic’s EP INVESTMENT ADVISORS, for the 100 percent sale of gas company DEPA Infrastructure.

This is the first step before the financial offers submitted by the two bidders are opened.

TAIPED officials are now examining the legal documents in case any clarification is needed before the sale’s procedure advances to the second and final stage, when the financial offers are opened, probably towards the end of August or early September.

The possibility of the bidders being asked to improve their offers has not been ruled out.

 

DEPA Infrastructure sale’s July 15 deadline confirmed, 2-3 bids expected

Privatization fund TAIPED has decided to keep unchanged a July 15 deadline for binding bids concerning the 100 percent sale of gas company DEPA Infrastructure, meaning this privatization procedure, now 17 months long, has hit the final stretch.

The Greek State is selling its 65 percent stake in DEPA Infrastructure and Hellenic Petroleum (ELPE) the other 35 percent.

The deadline date was reconfirmed following the energy ministry’s settlement of pending issues.

Just days ago, a legislative revision was ratified to grant 30-year license extensions to the EDA distribution companies, DEPA subsidiaries.

Also, a rule enabling the removal of geographical areas from the control of EDA companies if delays in their development of distribution networks in these areas have reached 18 months will not be applied if the EDA companies are found to not be responsible for these delays.

Moreover, the legislative revision has introduced a new mechanism enabling required revenue recovery underperformance by one of the country’s three EDA distribution company to be covered by the other EDA companies, through revenue offsetting procedures concerning equivalent periods.

If this procedure fails to resolve required revenue recovery underperformances, then any discrepancy will be covered through price adjustments at all three EDA companies.

A total of six participants have qualified for the final round of the DEPA Infrastructure sale. According to sources, two or three suitors are seen submitting binding bids in just over a week, but this remains to be confirmed.

The six qualifiers are:

  • EP INVESTMENT ADVISORS
  • FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II)
  • ITALGAS SpA
  • KKR (KKR Global Infrastructure Investors III L.P.)
  • MACQUARIE (MEIF 6 DI HOLDINGS)
  • SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd consortium.

 

Greek State to no longer control majority of ELPE board

Privatization fund TAIPED’s deferral, by a week, for May 28, of revisions concerning Hellenic Petroleum ELPE’s corporate agreement and green-focused transformation plan highlights the difficulties faced in the effort to find a right balance between the petroleum group’s two main shareholders, the Latsis group’s Paneuropean, holding a 47 percent stake, and the Greek State, holding a 35.5 percent stake.

The Greek State’s presence on ELPE’s 11-member board is expected to be reduced from seven, at present, to four on the new board, following fears of an even smaller presence.

Paneuropean supports the revisions and is expected to endorse them at the general shareholders’ meeting on May 28.

The main opposition Syriza party has intensified its criticism of the government’s handling of the ELPE plan, accusing the administration of putting the Greek State’s interests at stake.

The government will do what it must to ensure the interests of the Greek State as well as ELPE, so that the company may contribute to further economic growth in Greece, energy minister Kostas Skrekas noted earlier this week.

DEPA Infrastructure bids July 16, Commercial sale delayed

Privatization fund TAIPED has set a July 16 deadline for binding bids concerning the sale of a 65 percent stake in gas company DEPA Infrastructure.

This sale represents Greece’s only energy-sector privatization proceeding as planned, based on the fund’s updated Asset Development Plan.

A total of six bidding formations have qualified for the privatization’s second round. They are: EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

On the contrary, TAIPED has decided to delay bids for the sale of gas supplier DEPA Commercial until the third quarter of this year as a result of the company’s ongoing legal dispute with ELFE (Hellenic Fertilizers and Chemicals).

DEPA Commercial has challenged an Athens Court of First Instance verdict that ordered the company to return 61 million euros to ELFE for alleged overcharging between 2010 and 2015. The appeal has been deferred for September and may be jointly heard with a separate case involving the two companies over a similar amount of unpaid receivables that is allegedly owed by the fertilizer and chemicals producer to DEPA.

The DEPA Commercial sale, offering the Greek State’s 65 percent stake of the company, has attracted all the country’s major energy players as well as foreign companies.

Seven bidders are participating: C.G. GAS LIMITED (Copelouzos group); MET HOLDING AG; SHELL GAS B.V.; GEK TERNA; ELPE & EDISON INTERNATIONAL HOLDING N.V.; Motor Oil Hellas & PPC; and Mytilineos.

Desfa-Gek Terna, Energean to S. Kavala UGS tender 2nd rnd

DESFA-GEK TERNA and Energean Oil & Gas have advanced to the second-round, binding-offers stage of a tender offering use, development and operation of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala”, while China’s CMEC-MAISON GROUP failed to qualify, privatization fund TAIPED has announced in a statement.

Following the signing of confidentiality agreements, the two qualifiers will be granted access to the tender’s virtual data room, where financial and technical data will be uploaded for due diligence procedures.

However, much work lies ahead before this project matures to enable the submission of binding offers. A number of regulatory issues remain pending, officials monitoring developments have informed, describing the project as complex and highly technical.

Pending issues include determining the percentage of the UGS’s capacity to be regulated for pre-determined earnings, and the percentage of capacity whose earnings will be shaped by market forces. The regulatory period and WACC level also need to be decided and set.

Given these tasks, as well as obstacles raised by the pandemic, binding offers are not expected to be submitted any sooner than late-2021. The final stage of this tender appears most likely to take place early in 2022.

Privatization fund names 2nd round qualifiers for tenders

HRADF pre-qualifies interested parties for the next phase of the tenders of Alexandroupolis and Kavala ports, the UGS “South Kavala” and the lease of smelting plant, mines and relevant mining rights owned by the Hellenic Republic

The Board of Directors of the Hellenic Republic Asset Development Fund (HRADF) convened today and pre-qualified the interested parties that meet the eligibility criteria to participate in Phase B (Binding Offers Phase) of the following tender processes:

  • Alexandroupolis Port Authority

The HRADF’s BoD decided that four interested parties meet the criteria to participate in Phase B for the acquisition of a majority stake of at least 67% of the “Alexandroupolis Port Authority” (in alphabetical order):

  1. Consortium composed of the companies CAMERON S.A.- GOLDAIR CARGO S.A.- BOLLORE AFRICA LOGISTICS
  2. Consortium INTERNATIONAL PORT INVESTMENTS ALEXANDROUPOLIS, composed of the companies BLACK SUMMIT FINANCIAL GROUP – EUROPORTS-EFA GROUP and GEK TERNA
  3. QUINTANA INFRASTRUCTURE &DEVELOPMENT
  4. THESSALONIKI PORT AUTHORITY S.A.

 “Philippos II” port, operated by Kavala Port Authority

For the tender of the sub-concession of the right to use, maintain, operate and exploit a multi-purpose terminal within “Philippos II” port (currently operated by Kavala Port Authority S.A. – O.L.K. S.A.), the Fund’s BoD pre-qualified the following Interested Parties (in alphabetical order):

  1. Consortium composed of the companies IMERYS GREECE S.A. – GOLDAIR CARGO S.A. – I.M.G. S.A.
  2. Consortium INTERNATIONAL PORT INVESTMENTS KAVALA, composed of the companies BLACK SUMMIT FINANCIAL GROUP – EFA GROUP and GEK TERNA
  3. QUINTANA INFRASTRUCTURE & DEVELOPMENT
  4. THESSALONIKI PORT AUTHORITY S.A. 
  • UGS “South Kavala”

The Fund’s BoD pre-qualified two interested parties to participate in Phase B (Binding Offers Phase) of the tender for the concession of the use, development and operation of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala”.

The pre-qualified interested parties are (in alphabetical order):

  1. DESFA-GEK TERNA
  2. ENERGEAN OIL & G.A.S. 
  • Smelting plant, mines and relevant mining rights owned by the Hellenic Republic

For the lease of the Larymna smelting plant, the Larymna and Loutsi mines and relevant mining rights and other assets owned by the Hellenic Republic and currently leased to “LARCO General Metallurgical & Mining Company S.A.” (LARCO), in Phase B of the tender will participate the following interested parties (in alphabetical order):

  1. COMMODITY & MINING INSIGHT IRELAND LIMITED
  2. GEK TERNA S.A. – AD HOLDINGS AG
  3. MYTILINEOS S.A.
  4. SOLWAY INVESTMENT GROUP LIMITED
  5. THARISA PLC
  6. TRAFIGURA GROUP Pte Ltd.

Following the signing of the relevant confidentiality agreement, the pre-qualified investment schemes for each tender will receive the documents of phase B’ (submission of Binding Offers) and will grant access to the virtual data room (VDR), where data and information related to the assets and the tenders will be uploaded.

Appraisal of initial bids for Larymna assets lease contract by April

Privatization fund TAIPED and a supporting body are expected to complete, by early April, their appraisal of non-binding expressions of interest submitted to a tender by six investors for the lease of the Larymna smelting plant, Larymna and Loutsi mines, and relevant mining rights and other assets, all belonging to the Greek State and currently leased to troubled nickel producer Larco.

Expressions of Interest were submitted by the following Interested Parties (in alphabetical order):

  1. COMMODITY & MINING INSIGHT IRELAND LIMITED
  2. GEK TERNA S.A. – AD HOLDINGS AG
  3. MYTILINEOS S.A.
  4. SOLWAY INVESTMENT GROUP LIMITED
  5. THARISA PLC
  6. TRAFIGURA GROUP Pte Ltd

The six bids are currently being examined by the country’s foreign and defense ministries for any possible national security issues, sources closely monitoring the overall procedure have informed.

Once past this stage, the supporting documents accompanying the six non-binding offers will be examined by TAIPED and its supporting body.

Qualifiers making the tender’s second round will be given access to a video data room containing technical and financial data on Larco.

Energy privatization plans delayed by negative conditions

The government has decided to slam the brakes on procedures for major energy-sector privatizations, preferring to defer bidding deadlines as a result of a series of administrative hurdles and external factors, exacerbated by challenges and uncertainties caused by the pandemic over the past year.

Binding-bid deadlines for the sales of two gas utility DEPA offshoots, DEPA Commercial and DEPA Infrastructure, initially planned for this month by privatization fund TAIPED, will now be reset for early autumn, sources have informed.

Lockdown measures have prevented possible buyers from visiting the DEPA Commercial and DEPA Infrastructure headquarters and facilities as part of their due diligence procedures.

In addition, an ongoing legal battle between DEPA Commercial and ELFE (Hellenic Fertilizers and Chemicals) has also unsettled potential buyers. According to sources, investors are demanding protection in the form of guarantees should any court verdict require DEPA Commercial to compensate ELFE over a gas-pricing dispute.

As for issues surrounding the DEPA Infrastructure sale, Italy’s Eni, currently holding a 49 percent stake in EDA THESS, a DEPA Infrastructure subsidiary distributing to the Thessaloniki and Thessaly areas, wants to sell its stake. Officials are now examining a solution that would enable the DEPA Infrastructure privatization to be completed and followed up by the sale of Eni’s 49 percent stake in EDA THESS.

TAIPED’s announcement of second-round qualifiers in a tender offering development and operation of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece is expected in April. But the overall procedure will not be completed until next year.

A privatization plan for ELPE (Hellenic Petroleum) has been put on hold given the unfavorable conditions surrounding the global oil industry at present.

South Kavala UGS qualifiers in March, plenty of work needed

Privatization fund TAIPED is expected to have completed its appraisal of first-round bids in a tender offering development and operation of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece next month, possibly within the first half of March, energypress sources have informed.

The fund, at that point, will be ready to announce its list of second-round qualifiers.

TAIPED and the government are taking cautious steps for this project, regarded as complex, especially on matters concerning the tender’s binding-offers stage, sources informed.

Three bidding teams have submitted non-binding expressions of interest for the first round. These are: China Machinery Engineering Co. Ltd. (CMEC) – Maison Group; DESFA – GEK Terna; and Energean Oil & Gas (in alphabetical order).

Much work appears to still lie ahead for this privatization, whose completion is not expected any sooner than next autumn, sources noted.

Pending matters include the delivery of a finalized operating framework for the South Kavala UGS by RAE, the Regulatory Authority for Energy.

This framework will determine the pricing system for the UGS, or the proportion of the facility’s earnings to be regulated and the proportion to be shaped through competitive procedures.

Besides RAE’s operating framework, bidders will also need to conduct due diligence before submitting second-round offers.

 

 

DEPA Infrastructure sale could include Eni’s 49% in EDA Thess

The likelihood of revisions to Greek privatization fund TAIPED’s ongoing sale of DEPA Infrastructure that would incorporate the sale of a 49 percent stake in gas distributor EDA THESS, held by Italy’s Eni gas e Luce, into the procedure is now seen as probable as talks on the prospect have advanced.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce maintains the management rights with its 49 percent stake in the gas distributor.

Though Eni gas e Luce has been particularly upbeat in its judgement of EDA THESS’s performance until now, its involvement in distribution has remained secondary to retail energy, the company’s primary focus, on an international scale.

Eni gas e Luce’s 49 percent stake in EDA THESS is the Italian company’s sole distribution investment.

Prior to TAIPED’s launch of the DEPA Infrastructure sale, Eni gas e Luce had made clear its intentions to withdraw from its Greek investment in gas distribution.

DEPA has decided not to exercise priority rights it holds for EDA THESS’s 49 percent stake.

Eni gas e Luce initially seemed to reach an agreement to transfer its EDA THESS stake to Italgas, Italy’s biggest gas distributor and Europe’s third largest. However, Greek officials objected, deeming such a move would have given Italgas an advantage over rivals in the sale of DEPA Infrastructure. Italgas is one of six bidding teams through to this privatization’s second round.

Following a period of stagnancy, Eni gas e Luce returned, late in 2020, with a fresh proposal to TAIPED, calling for the attachment of its 49 percent stake in EDA THESS to the DEPA Infrastructure sale.

Besides Italgas, the other five bidding formations that have qualified for the second round of the DEPA Infrastructure sale are: EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

 

DEPA Commercial RES entry adds value to its ongoing privatization

Gas supplier DEPA Commercial’s move into the renewable energy sector through a 49 percent acquisition of North Solar, a company developing solar energy projects with a total capacity of 499.61 MW in northern Greece’s west Macedonia region, provides new prospects and added value to the gas company’s ongoing privatization procedure.

The agreement between DEPA Commercial and North Solar, announced last Friday, diversifies the gas company’s energy portfolio, activities, earnings potential and risk.

The move follows in the footsteps of strategies adopted by numerous international gas companies, expanding their reach into the RES sector to broaden their revenue sources and reduce environmental footprints.

DEPA Commercial is currently at the final stage of a sale launched by privatization fund TAIPED.

In addition to the prospective benefits promised by its RES entry, the gas company is also expected to gain in value as a result of its detachment from previous gas-auction responsibilities maintained during the market’s liberalization process.

DEPA Commercial’s market share appears to have stabilized at levels of approximately 40 percent, while the company’s financial performance, according to sources, improved in 2020.

 

DEPA Commercial sale moving ahead as planned despite ELFE legal dispute

Privatization fund TAIPED intends to move ahead as planned with the next round of the sale of gas company DEPA Commercial by setting a spring binding-bids deadline for candidates, despite concerns that an ongoing legal dispute between the company and ELFE (Hellenic Fertilizers and Chemicals) could impact the privatization’s proceedings, sources have informed.

An appeal filed by gas utility DEPA, DEPA Commercial’s parent company, challenging an Athens Court of First Instance verdict that ordered the company to return 61 million euros to ELFE as a result of overcharging was yesterday deferred for September and will now probably be jointly heard along with a separate appeal case involving the two companies over a similar amount of unpaid receivables owed by the fertilizer and chemicals producer to DEPA.

This ongoing legal dispute has caused uncertainty among potential buyers of DEPA Commercial as it is complicating their bid calculations.

TAIPED is currently engaged in talks with the finance and energy ministries for the establishment of an appropriate formula concerning a related term in the privatization’s sale and purchase agreement that would offer candidates security to a great extent.

A court ruling in favor of ELFE, in the DEPA overcharging case, could prompt other DEPA customers, such as electricity producers and industrial producers, to take legal action against the utility over overcharging claims. This could end up costing DEPA many hundreds of millions.

Outcome of DEPA appeal against ELFE crucial for sale

The outcome of tomorrow’s appeal filed by gas utility DEPA against ELFE (Hellenic Fertilizers and Chemicals) following an Athens Court of First Instance verdict ordering a 61 million-euro return from the gas utility for gas supply overcharging will be crucial for the privatization of DEPA Commercial, a new DEPA entity formed for the sale.

According to legal experts, tomorrow’s hearing could be deferred until September so that it may be concurrently heard with an ensuing appeal filed, in response, by ELFE against DEPA to challenge a separate Court of First Instance decision in October, 2019 that ordered ELFE to pay the gas company about 60 million euros in unpaid receivables. DEPA had sought 86.7 million euros. This ELFE appeal was given a September, 2021 date.

Combining appeal cases is commonly practiced by courts, the legal sources pointed out.

Postponement of tomorrow’s appeal case until September may prompt the privatization fund TAIPED to extend a March deadline it had set for binding bids concerning the DEPA Commercial privatization. Potential buyers would want to know the outcome of the DELA-ELFE legal dispute before placing any offers.

A court ruling in favor of ELFE could prompt other DEPA customers, such as electricity producers and industrial producers, to take legal action against the utility over overcharging claims.

The Court of First Instance ruled DEPA overcharged ELFE between 2010 and 2015 by applying an oil-indexed gas pricing formula used by Russia’s Gazprom. ELFE sought 302 million euros, well over the a 61 million-euro return determined by the court.

DEPA appeal against ELFE on January 28, deferral possible

A January 28 date has been set for an appeal filed by gas supplier DEPA Commercial to challenge a 2019 ruling by an Athens Court of First Instance that vindicated an overcharging claim by ELFE (Hellenic Fertilizers and Chemicals), awarding the producer a compensation amount worth 61 million euros.

ELFE was seeking a compensation amount of 302 million euros, arguing DEPA – the gas utility from which DEPA Commercial later sprung forth as a new group entity – overcharged between 2010 and 2015 for supply to the producer’s facility in Kavala, northern Greece, by passing on the increased cost of DEPA’s oil-indexed contract with Gazprom.

Also in 2019, the Athens Court of First had concurrently delivered a separate verdict in favor of DEPA, vindicating the gas company for unpaid receivables owed by ELFE. The producer was ordered to pay a sum estimated between 59.5 and 60 million euros.

In response, ELFE, too, filed an appeal opposing this 2019 decision, the hearing’s date set for September, 2021, sources informed.

Legal sources explained that the two appeals could end up being heard concurrently in September, based on a decision that may emerge from the forthcoming appeal ten days from now. Combining appeal cases is commonly practiced by courts, the sources noted.

If so, the amount of time needed to resolve this legal dispute will be extended, which would impact privatization fund TAIPED’s scheduling of the DEPA Commercial privatization.

TAIPED has set a March deadline for binding offers. This deadline could end up being stretched beyond September.

Should DEPA Commercial’s appeal against ELFE ultimately fail, then other customers of the gas company, primarily electricity producers and industrial enterprises, could also seek compensation amounts for overcharging.

Some pundits have pointed out that electricity producers were probably able to pass on to their customers any cost increase resulting from DEPA’s oil-indexed contract with Gazprom. On the contrary, industries did not have such leeway.

Outcome of ELFE legal battle crucial for DEPA’s privatization

The outcome of an appeal filed by gas supplier DEPA Commercial to challenge a 2019 ruling by an Athens Court of First Instance that vindicated an overcharging claim by ELFE (Hellenic Fertilizers and Chemicals), scheduled to be heard next week, is pivotal for the gas company’s privatization plan.

If ELFE overcomes the appeal lodged by DEPA Commercial – which, as things stand, is expected to return 63 million euros to the fertilizer and chemicals company for overcharged gas supply between 2012 and 2015 – then this precedent will prompt more overcharging cases, for the same period, by other customers, primarily electricity producers and industrial enterprises.

Such a development, which, according to sources, could end up costing DEPA Commercial a total of up to one billion euros in rebates, threatens to derail the company’s privatization procedure as investors would not want to take on such a financial burden. Worse still, DEPA Commercial’s sustainability would be severely tested, the sources added.

DEPA Commercial was formed by gas utility DEPA specifically for its privatization.

The appeals court will require some time before it delivers its verdict. If the ruling is in favor of ELFE, then DEPA Commercial is expected to take the case to the Supreme Court. A prolonged legal battle would surely impact the gas company’s growth plans.

In 2019, the Athens Court of First Instance ruled that DEPA passed on to its customers the cost of an oil-indexed purchase agreement with Russian gas company Gazprom without considering lower prices available at natural gas hubs.

Taking into account this ongoing legal battle, privatization fund TAIPED has set an early-spring deadline for binding bids by potential buyers of DEPA Commercial as well as DEPA Infrastructure, the gas utility’s other new entity.

Storengy’s Kavala UGS tender exit prompts formation changes

A decision by France’s Storengy (Engie) to not participate in a forthcoming tender offering an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north has prompted a domino effect of formation changes by groups of investors planning to bid.

GEK TERNA appears to have formed an association with gas grid operator DESFA for the tender after having previously agreed to join forces with Energean Oil & Gas and Storengy.

Energean Oil & Gas, holding a license for the virtually depleted South Kavala field, has not remained an onlooker. The company has also found a partner, believed to be domestic, from the construction sector, according to sources.

To date, Energean Oil & Gas has held talks with three major groups, Mytilineos, AVAX and Aktor, the same sources added.

A Chinese investor is also believed to be interested in the South Kavala UGS tender, staged by privatization fund TAIPED, but will not link up with any partners.

The tender is offering rights for the use, development and exploitation of the virtually depleted offshore natural gas field south of Kavala as a UGS facility for a period of up to 50 years.

Participants must submit first-round, non-binding offers by October 19 following three deadline extensions.

RAE issues undermining DEPA Infrastructure privatization

Delays, instability and flawed intervention by RAE, the Regulatory Authority for Energy, on important operating issues concerning gas utility DEPA’s subsidiaries EDA Attiki, EDA Thess and DEDA – the three distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively – are undermining the privatization procedure for DEPA Infrastructure, a new DEPA entity placed for sale, DEPA Infrastructure has warned in a letter to the authority.

In the letter, also forwarded to privatization fund TAIPED and the energy ministry, DEPA Infrastructure complains of a RAE delay in endorsing EDA tariffs for 2019 to 2022, which has consequently placed the gas company’s development plan in turmoil.

Besides not having reached a decision on gas distribution pricing policy, the authority has changed the WACC level three times since last year, including recently, which has negatively impacted the yields of DEPA subsidiary investments, sources noted.

Also, RAE regards initiatives taken by the three gas distributors to attract more consumers to the natural gas market as a form of state aid, DEPA Infrastructure protests in the letter, referring to distribution network connection fee discounts offered by the distributors, as well as subsidy support for natural gas system installations.

Any moves to curb these initiatives promoting gas usage would derail the natural gas sector’s energy-mix penetration target for 2030, as specified in the National Energy and Climate Plan, DEPA Infrastructure contends.

These unfavorable conditions threaten to delay the DEPA Infrastructure privatization, company sources stressed.

The sale procedure’s video data room is still lacking vital information for prospective bidders, who could begin seeing the DEPA Infrastructure privatization as a high-risk investment, the sources noted, adding that WACC level reductions will ultimately reduce the market value of DEPA Infrastructure and the subsidiaries.

DEPA Commercial, DEPA Infrastructure binding-bid deadlines extended

The second-round, binding-bid deadlines for the privatizations of gas utility DEPA’s two new entities, DEPA Commercial and DEPA Infrastructure, have once again been reset for latter dates despite the government’s recent approval of privatization fund TAIPED’s revised Asset Development Plan.

According to sources, the new binding-bids deadline for DEPA Commercial, a privatization expected to draw major interest as a result of the company’s strong market standing and potential, has been reset for March, instead of December.

According to some sources, TAIPED wants to include improved DEPA Commercial results anticipated for the third quarter into the sale’s video data room, whose data will be assessed by prospective bidders once they sign confidentiality agreements.

TAIPED will, as a result, aim to achieve a higher selling price for DEPA Commercial, which has recaptured market share losses.

Other sources insist the rescheduled date is linked to an uncertainty felt by investors over DEPA’s ongoing legal dispute with ELFE (Hellenic Fertilizers and Chemicals).

A DEPA appeal of a court verdict that disapproved the utility’s pricing policy for ELFE is scheduled to take place in January, while a ruling will be delivered even later. Investors want clarity on this front before they can submit binding bids.

DEPA Infrastructure’s deadline for binding bids has now been rescheduled for February instead of January.

Pundits have attributed this development to a failure by RAE, the Regulatory Authority for Energy, to finalize a gas distribution network pricing policy by September, as had been planned. The authority has yet to offer a new date for the new network pricing policy, sources said.

Prospective bidders consider this pricing detail crucial as it determines the earnings level of DEPA Infrastructure.

 

Business plan, better results, new activities in DEPA Commercial VDR

The virtual data room for a forthcoming privatization to offer a 65 percent stake in DEPA Commercial, an offshoot of gas utility DEPA, expected to be opened for potential buyers to assess by the end of this week, will present a business plan, improved financial figures at DEPA, new company activities envisaged, as well as DEPA’s outlook on the course of the country’s natural gas market and the company’s position within it.

According to privatization fund TAIPED’s revised Asset Development Plan, participants will submit binding bids in December.

The field of first-round entries, comprising two consortiums and five companies, will have roughly three months to prepare binding bids, according to the schedule.

Hellenic Petroleum ELPE and Italy’s Edison are one of the privatization’s two participating consortiums, the other formed by power utility PPC and Motor Oil Hellas. The five individual participants are: Mytilineos, TERNA, Copelouzos group, Shell and the Swiss-based MET group.

New partnerships could be established by the field of participants as long as they do not affect the sale’s competition standards and have been approved by TAIPED.

The sale of DEPA Commercial is a major attraction for potential buyers as it offers a big slice of the wholesale and retail markets, including gas supplier Fysiko Aerio Attikis, a subsidiary covering the wider Athens area. Fysiko Aerio Attikis already serves close to 400,000 households and 10,000 businesses.

DEPA Commercial VDR expected to open for bidders by end of week

A virtual data room offering financial and technical information concerning the privatization of DEPA Commercial, an offshoot of gas utility DEPA, will be opened to prospective bidders by the end of this week, sources have informed.

A final meeting between DEPA Commercial’s administration and privatization fund TAIPED may be staged today or tomorrow before the VDR is opened up for investors.

The sale of DEPA Commercial, expected to be fiercely contested by the country’s major energy players, should produce a result by December, according to an updated TAIPED schedule for its Asset Development Plan. This plan has already been approved by KYSOIP, the Government Council for Economic Policy.

A VDR for DEPA’s other privatization, DEPA Infrastracture, was opened in late August. Despite its earlier launch, binding offers are expected sooner for DEPA Commercial, whose conclusion has been scheduled for January, 2021 by TAIPED.

Well-informed sources have attributed this differing pace of schedules to a more complex sale procedure demanded for DEPA Infrastructure, requiring intervention by RAE, the Regulatory Authority for Energy. In addition, EU authorities will need to provide certification, needed for transfers of distribution networks and energy transmission systems.

For the time being, all of the country’s energy players are expected to gain access into the DEPA Commercial VDR as a first step before deciding on whether to place binding bids. Partnerships could be sought.

 

 

 

DEPA Infrastructure VDR open, DEPA Commercial data soon

A virtual data room has just been opened for the six bidding teams preparing to make second-round offers in the privatization of gas company DEPA Infrastracture, an offshoot of gas utility DEPA.

Czech company EPH, Italy’s Italgas, the Australian investment funds First State Investments and Macquarie, US firm KKR and China’s Sino-CEEF & Shanghai Dazhong Public Utilities now have access to all relevant data concerning the DEPA Infrastructure sale.

Another VDR is expected to be opened within the next few days for bidders participating in the privatization of DEPA Commercial, DEPA’s other entity up for sale.

The participants in this sale, seven entries in total, are: Motor Oil Hellas-PPC, ELPE-Edison, Mytilineos, GEK-TERNA, the Copelouzos group, Dutch company Shell and the Swiss-based MET Group.

VDR information for the DEPA Commercial sale will be made available over three phases as a protective measure intended to ensure competition. The first phase, offering non-sensitive data, will be open for all. Access to VDR information during the second stage, offering sensitive data, will be restricted to consultants. Bidders will be offered conditional access to confidential information in the third phase.

Greece’s privatization fund TAIPED is aiming to declare preferred bidders for both sales in the final quarter of this year. Market officials, however, believe this is more likely to occur in the first quarter of 2021.

DEPA Commercial bidders are allowed to team up and establish consortiums but partnerships for the DEPA Infrastructure sale are not permitted.

Bidders participating in the DEPA Commercial sale are mainly eyeing the company’s prized asset, retail gas supplier and subsidiary Fysiko Aerio Attikis, covering the wider Athens area. This company already serves close to 400,000 households and 10,000 businesses.