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.

Metka, Terna winning bidders for PPC Renewables 15-MW Kozani units

PPC Renewables has reached decisions to award two development contracts for respective 15-MW solar parks in the Kozani area, northern Greece, to Metka, a member of the Mytilineos group, and Terna, following two tenders, nearing finalization within the next few days, energypress sources have informed.

The imminent signing of these development contracts will signal the first steps in the development, by PPC Renewables, of a wider 230-MW solar energy complex, Greece’s biggest to date and one of Europe’s largest.

Construction work for the two 15-MW solar parks is expected to commence this coming summer, PPC Renewables anticipates.

The Kozani project will be spread across lignite mine locations operated by PPC Renewables’ parent company PPC, the power utility.

The 15-MW solar park to be developed by Metka will be equipped with its own sub-station and stationary mounts holding solar panels in a fixed position. This project’s total cost is estimated at just under 10 million euros.

The other 15-MW solar park project, to be constructed by Terna, will also be equipped with its own sub-station but, instead of fixed-position panels, will feature solar trackers, orienting panels toward the sun. This project will cost a total of approximately 11.5 million euros.

A tender for the Kozani project’s biggest segment, a 200-MW solar park, is still in progress. The deadline for bids has been slightly extended to June 11. Some 30 companies, Greek and foreign, have expressed major interest. Most are expected to submit bids.

PPC Renewables expects to have doubled its current installed RES capacity by the second half of 2021, up to 300 MW, according to the company’s chief executive Konstantinos Mavros.

A 600-MW installed capacity target has been set for the end of 2022. Looking further ahead, PPC Renewables is striving for a 1.5-GW total five years from now.

Work on Crete-Athens grid link nears launch after approvals

The Court of Auditors has approved contracts offered to winning bidders for installation of the Crete-Athens grid interconnection’s four cable segments, enabling the signing of contracts for the one billion-euro project’s biggest stage, budgeted at 615 million euros, probably within the month, energypress sources have informed. Work will then be able to commence.

Prysmian, Nexans and Hellenic Cables-NKT were awarded contracts for the project’s four cable segments. Prysmian secured two of these four contracts.

On another front, the Court of Auditors is expected to approve a contract for the project’s other key stage, the design, supply and installation of two converters and a substation, in June, according to sources.

Siemens – Terna, a member of the GEK TERNA group, submitted an improved bid of 370 million euros late last month to be awarded this contract by power grid operator IPTO’s fully-owned subsidiary Ariadne Interconnection, the project promoter.

The Court of Auditors’ approval of contracts for the project’s four cable segments follows a recent decision by the environment and energy ministry endorsing the 1,000-MW project’s environmental terms.

EU funding for the project through the NSRF (2014 – 2020) is expected to be approved within the next week to ten days, according to reliable sources. This would subsequently also offer IPTO access to bank financing.

Siemens-Terna awarded converter stations contract for Crete-Athens link

Power grid operator IPTO’s fully-owned subsidiary Ariadne
Interconnection has successfully completed a tender process for the Converter Stations of the Crete-Athens Interconnection, awarding the contract to Siemens – Terna, a member of the GEK TERNA group, ADMIE (IPTO) Holding has announced. 

After the submission of an improved bid on March 26, the contract price was set at 370 million euros, of which 358.6 million euros concern the construction of the converter stations. The remaining 11.4 million euros concern maintenance of these stations.

The contract calls for a 36-month implementation period and will be signed after approval by the Court of Auditors.

The project will be included in the list of the Operational Program “Competitiveness, Entrepreneurship and Innovation” of the NSRF 2014 – 2020.

Τhe tendering procedure for the design, supply and installation of two Converters and a Substation for the DC Electrical Interconnection between Crete and Athens was launched on May 24, 2019.

The tender attracted the interest of world leaders in the industry and on November 1, 2019 the GE-Nari-Mytilineos and Siemens-Terna consortiums submitted binding offers.

The evaluation of the offers submitted by the consortiums, both of which possess strong technical backgrounds and specialized experience in similar projects abroad, required more than four months due to the project’s elevated technical demands. 

The technical evaluation was completed on March 13 and the Siemens-Terna consortium’s offer qualified, taking into account all relevant issues related to the interconnection.

Commenting on the tender, the IPTO group’s CEO Manos Manousakis noted: “During these challenging times, the tender process for our
flagship project, amounting to 1 billion euros, was successfully completed without problems.
IPTO will continue to focus all its efforts in order to protect the timely implementation of the project and ensure the safe and reliable power supply of Crete through the mainland system by 2023. Apart from the economic benefits of the interconnection of Crete for all Greek consumers, through the decline of Public Service Obligations (PSO), the implementation of this
project paves the way for accelerated RES integration on the island based on the principles of sustainable development.”

Big RES projects on islands to be given IPTO cable access

Investors behind major-scale RES project plans for non-interconnected islands and island complexes, previously granted licenses incorporating the installation of cable interconnections, will now be able to develop their renewable energy facilities and reserve capacities through interconnection infrastructure developed by power grid operator IPTO.

The energy ministry intends to attach a related amendment to a draft bill concerning environmental permits.

Licenses granted to investors in the past for major-scale wind energy farms on non-interconnected islands and island complexes expected investors to install related cable infrastructure for energy distribution.

Such licenses have been granted to the Copelouzos group and Terna for projects on Crete and Iberdrola Rokas for investment plans in the North Aegean.

The new legal framework being prepared by the ministry promises to offer investors greater flexibility as development of interconnection infrastructure will no longer be set as a condition for related RES project licenses.

Instead, investors will be able to reserve capacities through cable interconnections being developed by IPTO. However, investors will need to contribute to the cost of this infrastructure in accordance with their reserved share of the overall capacity.

Alexandroupoli FSRU tender draws 3 bids, all by key players

A tender staged by Gastrade for the construction of a pipeline and related projects needed to link the prospective Alexandroupoli FSRU, in Greece’s northeast, with the national gas grid, attracted bids from three companies, all major players at an international level, on the deadline day last Friday.

Experienced Italian firm Saipem teamed up with Greece’s Terna for one of the three bids, while two Dutch bidders, Boskalis and Van Oord, submitted the other two offers.

Gastrade officials will appraise the technical aspects of the offers before moving on to the financial side.

Meanwhile, the second round of a tender for the project’s FSRU is expected to be announced within the next few days, inviting first-round participants to submit binding offers. Over ten bidders, experienced players from Greece and abroad, submitted first-round bids for the FSRU.

The deadline of an ongoing market test for binding offers concerning the FSRU’s capacity reservations, crucial for the project’s final investment decision, expires in a few days’ time.

Besides the LNG quantities involved, the duration of capacity reservation requests will also be a pivotal factor for the project’s sustainability.

Gastrade officials, basing their judgement on the procedure’s developments until now, are confident of a favorable market test outcome that will lead to the project’s actualization.

Crete link environmental terms, needed for contracts, soon

The energy ministry will publish the environmental terms for Crete’s major-scale grid interconnection with Athens, needed for project contracts, within the first ten days or March, power grid operator IPTO, the project’s promoter, anticipates.

The delivery of these terms will enable the winning bidders for the project’s cable installations, Prysmian, Nexans and Hellenic Cables – NKT, to sign project contracts with the operator, probably two to three weeks later, somewhere between late March and early April.

Meanwhile, appraisals of offers submitted by bidders for project converter stations are believed to be nearing completion. Two consortiums, Terna-Siemens and Mytilineos-General Electric-Nari have submitted offers to the tender for converter stations.

Construction of the major-scale grid interconnection, from Crete to Athens, will be able to commence once the cable and converter station contracts have been signed.

IPTO insists the project will be fully operational in 2023.

Work on Crete’s small-scale grid interconnection with the mainland, from Crete to the southern Peloponnese, is progressing as scheduled, IPTO has informed.

The installation of this segment’s submarine cables, awarded to Prysmian and Hellenic Cables, is scheduled to be completed around November, according to IPTO’s schedule.

This segment involves deep-sea cable installation work at more than 1,000 meters below sea level, an effort said to be unprecedented anywhere in the world.

Additional IPTO stake seen offered within next three months

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

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

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

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

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

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

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

 

One of three Crete link bidding teams wants time or will exit

ABB, the world’s biggest developer of power grid interconnection projects, has requested a further deadline extension greater than the one-month periods of additional time already granted twice for a tender concerning the Crete-Athens grid interconnection project’s engineering, procurement and construction of two converter stations and a GIS substation, energypress sources have informed. The tender’s current deadline is set to expire on October 31.

Both the Greek government and power grid operator IPTO appear determined not to accept any further deadline extension requests as this, they believe, would increase the risk of a project delay and, consequently, energy sufficiency issues on Crete.

Outdated, high-polluting power stations still operating on Crete soon need to be withdrawn.

ABB, which has joined forces with Greek maritime infrastructure construction and maintenance group Archirodon for the Cretan project’s tender, has cited the complexity of the project for the additional time the company appears to need. If a sizable extension is not granted, then ABB and project partner Archirodon will most likely withdraw from the tender, it is believed.

On the contrary, two other partnerships established for the tender, according to reliable sources, are preparing to submit their offers. Siemens is believed to have joined forces with Greek construction company TERNA and General Electric is working with Greece’s Mytilineos, according to sources.

The grid interconnection project’s development faces a tight schedule. IPTO chief executive Manos Manousakis told a recent conference the project will be launched early 2023, not at the end of 2022, as was previously believed.

PCI hopes for underground gas storage boosted by late effort

NEWS UPDATE: 

Greek energy ministry officials have made a successful last-ditch effort ahead of this Sunday’s elections that boosts the country’s chances of keeping on the EU’s PCI list an underground gas storage facility in the offshore South Kavala region, planned through the development of a depleted natural gas field, energypress sources have informed.

An FSRU in Alexandroupoli, northeastern Greece, will also be on the PCI list, enabling favorable funding terms, the sources added.

Prior to this latest development, energy ministry officials assured that problems concerning the South Kavala project’s place on the PCI list would be overcome, while admitting the project had been negatively appraised by Brussels.

Earlier today, energypress reported: 

A project entailing the development of a depleted natural gas field in northern Greece’s offshore South Kavala region as an underground gas storage facility appears likely to be removed from the European Union’s PCI list, a status enabling favorable funding.

Delays and the country’s early elections appear to have taken their toll and are believed to be key reasons behind the project’s likely removal from the PCI list.

The underground gas storage facility has been negatively reviewed by EU authorities amid procedures leading to the determination of a new and revised PCI catalogue for 2020-2021, energypress sources have informed.

Not all hope has been lost. Final decisions by EU authorities will be reached in October, which gives Greek officials some time to present their case in favor of the project’s PCI-list inclusion.

The asset’s ownership, along with the responsibility for its utilization, have been transferred to the privatization fund TAIPED, which has significantly delayed related initiatives as it obviously does not consider the project to be a top-priority issue.

The project’s budget is estimated at between 300 and 400 million euros, while its storage capacity could end up being anywhere between 360 and 720 million cubic meters, as much as 10 percent of the country’s annual natural gas consumption.

France’s Engie, as well as Terna and Energean, have formed a consortium to bid for the project whenever a tender is staged.

Offers soon for IGB gas pipeline project tenders, nearing completion

Three tenders offering contracts for Greek-Bulgarian IGB gas grid interconnector’s project manager, pipeline procurement and construction are approaching completion.

Offers for the tender to appoint a project manager, to monitor development on behalf of shareholders, are expected this month.

Greece is well represented in the tender concerning the construction of the IGB pipeline, planned to cover a 182-km stretch and budgeted at 145 million euros. A total of five consortiums with three Greek firms on board have advanced to this tender’s second round.

Germany’s Max Streicher has teamed up with Greece’s Terna; China Petroleum Pipeline Engineering has joined forces with Aktor; and J&P Avax is the third local qualifier. Their bids are expected next week.

ICGB, the IGB project’s consortium, a joint venture involving YAFA Poseidon – a Greek gas utility DEPA half-owned subsidiary – and the state-controlled Bulgarian Energy Holding (BEH), plans to have appraised these offers within a month before announcing a preferred bidder at the end of April.

The IGB is planned to be linked with the TAP route, offering Bulgaria and the wider southeast European region access to Caspian gas as well as LNG.

 

IPTO signs Crete-Peloponnese link contracts, a major energy security step

Power grid operator IPTO has taken a major step in resolving Crete’s energy sufficiency threat feared as of 2020 by signing contracts with four companies, Fulgor, Hellenic Cables, Prysmian Powerlink and Terna, for the development of Crete’s grid interconnection with the Peloponnese.

Energy minister Giorgos Stathakis, who attended the signing ceremony in Kissamos, northwest Crete, described the island’s interconnection project as a historic step that paves the way for Crete’s transformation into a green energy island of minimal environmental impact, while also ensuring energy security and growth prospects for the island.

A European Commission extension for diesel-fired power stations operated on the island by the main power utility PPC expires at the end of 2019.

Ending Crete’s energy isolation by linking the island with the mainland’s grid has been discussed since the 80s, when the required technology and means were not yet available, Stathakis noted, adding conditions have now changed and led to an acceleration of grid interconnections.

The Crete-Peloponnese grid link, expected to be completed in 2020, represents the first step of a wider link, from Crete to Athens, planned to be completed in 2022.

Elsewhere, the first of three grid interconnection stages in the Cyclades has been completed while the other two are said to be making swift progress.

 

Crete-Athens link tender announcement seen 1Q of 2019

Power grid operator IPTO, given the green light by RAE, the Regulatory Authority for Energy, for the development of the Crete-Athens grid interconnection, despite European Commission objections, is pressing ahead and expects to receive approval of its related environmental studies in two to three months before launching a tender by March, 2019.

IPTO, currently progressing based on a schedule set by RAE, has completed various preliminary work, including deep-sea studies, and aims to complete the project by September, 2022.

Greek authorities are planning to keep the main power utility PPC’s diesel-fired power stations on Crete running beyond an end-of-2019 limit set by Brussels to avert an energy supply threat on the island, as was made known earlier this week by energy minister Giorgos Stathakis. His ministry has submitted a related application to Brussels for a deadline extension.

RAE is believed to still be considering various alternative options, including a proposal from Qatar for 200-MW capacity electricity supply to the island via an LNG tanker and generation facility. The cost of this option is believed to equal that of keeping PPC’s current stations running.

A proposal by energy firm Terna entailing the transfer of its gas-fueled Heron I unit, located on the outskirts of Thebes, to Crete is also still on the cards.

Euroasia Interconnector, a consortium of Cypriot interests heading a wider PCI-status project planned to link the Greek, Cypriot and Israeli power grids, has contested with IPTO for control of the wider project’s Crete-Athens segment.

Local investor views vary ahead of PPC unit sale market test

Though an imminent market test for Greece’s bailout-required package sale of main power utility PPC lignite units has yet to be announced, potential investors have already reacted in a variety of ways, most of them hesitantly, as a result of the lack of clarity on a number of issues.

Questions still remain on how overstaffed units and the future course of carbon emission right costs, expected to skyrocket within the next few years, will be dealt with.

In comments to energypress, certain players already ruled out their interest, one example being Elpedison. Offiicals at TERNA and Mytilineos noted they remain undecided and are awaiting further clairity. The Copelouzos group declared it will participate in the sale.

Though the majority of local energy firms have remained cautious, they face no choice but to closely monitor developments, as these could bring about major changes to Greece’s electricity market, assuming the sale effort makes progress. Investor opinion shifts along the way cannot be ruled out.

Financing could be an issue for investors contemplating this sale, to offer a package of units representing 40 percent of state-controlled PPC’s lignite capacity, probably divided up for more than just one tender. Banks, taking their cue from energy firms in Europe’s west, which have turned their backs to carbon-sector investments, seen as unfeasible in this day and age, are no longer anything carbon-related. Any investor financing needs would need to be sought at non-EU banks.

The market test is expected to influence the sale’s prospects, price levels, and shape terms once the tenders are staged next June.

Energy minister Giorgos Stathakis struck a deal with the country’s lenders just days ago on details concerning state-controlled PPC’s lignite unit sale, as part of the bailout’s third review.

As for investors beyond Greece, Chinese firms are believed to be firmly interested, while a number of east European firms, such as the Czech Republic’s CEZ, as well as Japan’s Hitachi, could also explore the sale’s prospects.

 

Commercial interest suspicions raised over Italy power link problem

Frequent problems disenabling the Greek-Italian grid interconnection to function for extended periods have raised suspicions that commercial interests, besides technical issues, may also be at play.

The interconnection’s latest breakdown, occurring at a time when crossboundary electricity trade is set to rise, has once again brought the issue to the fore. In response, RAE, Greece’s Regulatory Authority for Energy, and its Italian counterpart, have begun investigating the matter in an attempt to identify the causes behind the regular breakdowns.

The interconnection stopped operating in early October and is not expected to become available again until at least the end of the year.

RAE and Italy’s Terna informed of a technical issue at the Greek-Italian grid interconnection on October 9.

Inspections of the interconnection’s overhead segment in Greece did not reveal any issues, prompting Terna to focus its check on the submarine section, where a technical problem was reportedly identified. A specialized vessel was then recruited for the repair effort. According to initial estimates, work is expected to be completed by mid-December while the interconnection is seen working again within the last yen days of the year.

As a result of the disruption, a mechanism was activated on November 25 requiring RAE and Terna to cover Physical Transmission Rights (PTRs) until the damage is repaired.

Italy’s interconnections with France, Switzerland, Austria and Slovenia also encountered operational problems in October and November.

Grid capacities in the wider region are expected to be tested by extreme weather conditions this coming winter. All these factors combined could prompt a domino effect that may lead to electricity capacity issues in various parts of Europe and increase prices. If so, the adequacy of precautionary measures taken by RAE will be put to the test.

Four power operators express non-binding interest in IPTO

The first stage of a bailout-required international tender offering a 24 percent share of IPTO, the power grid operator, has been completed with four bidders submitting non-binding expressions of interest, PPC, Greece’s main power utility and parent company of IPTO, has announced.

PPC, controlled by the Greek State with a 51.12 stake, will now assess the technical and economic credentials of bidders to decide whether they qualify for the next stage.

Four companies submitted expressions of interest, these being Italy’s Terna, France’s RTE, an EdF subsidiary, and two Chinese companies, State Grid of China Corporation (SGCC), and China Southern Power Grid.

Second-round qualifiers will be provided IPTO’s financial details and time to conduct due diligence procedures before they submit their binding offers.

HSBC Bank, Citigroup Global Markets Ltd and NBG Securities are acting as financial advisors, while Rokas is PPC’s legal advisor for the IPTO tender.

PPC was granted permission to stage the IPTO at a general shareholders meeting on July 11. The deadline for non-binding expressions of interest expired yesterday.

A prefered bidder for the IPTO tender will need to be selected by October 31 and the procedure completed by February 28, 2017. Should Greece’s international creditors deem that the IPTO tender is not making satisfactory progress, then a process to full privatize IPTO will be triggered.

Besides the 24 percent offered to strategic investors, the current IPTO privatization plan also entails transferring 51 percent to the Greek State and offering the other 25 percent to investors through the bourse.

 

Highest bidder to secure IPTO’s 24% in fast-moving tender

The assessment of technical and economic credentials submitted by electricity operators interested in acquiring a 24 percent share of IPTO, Greece’s power grid operator, through an international tender whose deadline for first-round non-binding expressions of interest expired yesterday, is expected to be completed swiftly, by the second week of August.

Qualifiers will then be given time to conduct due diligence procedures before they submit their binding offers. The faster the first-round non-binding stage is completed, the more time qualifiers will have for due diligence.

Facing a tight schedule for the bailout-required international tender, the main power utility PPC, controlled by the Greek State with a 51.12 stake, launched the procedure for IPTO, currently a wholly owned PPC subsidiary, just over a fortnight ago.

According to energypress sources, once the strategic investors are through to the tender’s next stage the only criterion at play will be the price they are willing to offer for IPTO’s 24 percent.

All bids, whether coming from companies with EU or non-EU roots, will be treated equally during the second stage.

Four electricity network operators have expressed non-binding expressions of interest in IPTO, PPC has announced, these being Italy’s Terna, France’s RTE, an EdF subsidiary, and two Chinese companies, State Grid of China Corporation (SGCC), and China Southern Power Grid.

At this stage, it is believed that SGCC, which already holds a 25 percent stake in Portuguese energy company REN, will lead the pack of bidders if it decides to push for IPTO’s 24 percent. SGCC had also taken part in a previous attempt to sell 66 percent of IPTO, staged a couple of years ago by Greece’s preceding conservative New Democracy party-led coalition.

At the time, IPTO’s 66 percent was evaluated at just over 900 million euros, while SGCC was reportedly preparing to offer an amount of between 600 million and 800 million euros. Based on these calculations, a 24 percent stake of IPTO is worth 216 million euros. SGCC can be expected to easily make an offer of over 300 million euros, the amount Italy’s Terna had decided to offer for 66 percent of IPTO during the previous sale attempt for the operator.

Conditions have changed over the past two years. SGCC has since become indirectly linked with Terna after acquiring a stake in CDP Reti, an Italian holding company that maintains an equity share in Terna. Also, the Italian banking sector has clearly deteriorated during this period.

France’s RTE is definitely capable of submitting a competitive offer that could rival or outdo any Chinese bid.

China Southern Power Grid, the second Chinese firm to declare a non-binding interest in IPTO, will most probably not take part in the tender’s next stage as, unlike SGCC, it does not have a European presence. If this remains so, China Southern Power Grid will not meet the tender’s criteria. The IPTO tender’s terms state that bidders must be certified European operators. China Southern Power Grid could seek a European partner, but this is considered unlikely.

The two Chinese firms are also currently participating in an Australian tender offering a share of the country’s power grid.

A prefered bidder for the IPTO tender will need to be selected by October 31 and the procedure completed by February 28, 2017. If Greece’s international creditors deem that the IPTO tender is not making satisfactory progress, then a process to full privatize IPTO will be triggered.

Besides the 24 percent offered to strategic investors, the current IPTO privatization plan also entails keeping 51 percent for the Greek State and offering the other 25 percent to investors through the bourse.

 

 

Terna, RTE definite for IPTO tender’s first-stage deadline

Barring unexpected developments, two European power grid operators, Italy’s Terna and France’s RTE, an EdF subsidiary, will submit non-binding expressions of interest for an international tender launched by Greece’s power utility PPC a fortnight ago to sell a 24 percent stake of subsidiary firm IPTO, the power grid operator, to a strategic investor, in line with terms of the country’s third international bailout. Non-binding expressions of interest by are due by tomorrow.

The technical and financial credentials of interested firms will be assessed during this first stage of the tender’s procedures.

Participants who make it through will qualify for the second stage and be provided access to IPTO’s virtual data room so as to conduct their own financial, technical and legal inspections. Other details to be provided to candidate bidders include vendor due diligence reports and bank letter of guarantee guidelines.

A prefered bidder will need to be selected by October 31 and the procedure offering IPTO’s 24 percent share must be completed by February 28, 2017.

The tender’s regulations specify that participating operators must be registered with ENTSO-E, the 42-member European Network of Transmission System Operators.

HSBC Bank, Citigroup and NBG Securities will act as financial advisors.

Terna and RTE, tipped for IPTO 24%, need to resolve issues

Exploratory talks between Greek authorities and strategic investors considering a 24 percent stake in Greece’s power grid operator IPTO have taken a step further now that the sale’s international tender has been officially launched. Given the tight schedule imposed by the country’s creditors, preliminary talks with potential bidders had jumped the gun prior to the tender’s announcement, on Tuesday.

According to sources, officials of Italy’s Terna visited IPTO’s headquarters just days ago. Terna had also expressed an interest in IPTO when Greece’s preceding conservative New Democracy party-led government attempted to sell 66 percent of the operator.

Government officials are convinced Terna will submit a bid in the latest sale effort, a procedure through which IPTO is being split from its parent company PPC, the main power utility. Besides the 24 percent being offered to a strategic investor, a 25 percent share of IPTO will be sold to investors through the bourse and 51 percent will be transferred to the Greek State, which currently holds a 51 percent stake in PPC.

Certain sources contend that the 24 percent stake of IPTO being offered to strategic investors has been specifically customized to match with an older decision reached by Terna’s administration for a 400 million-euro spending limit on IPTO. The Italian company withdrew from the previous IPTO tender in February, 2015, shortly after the Syriza party had been elected to lead a coalition government.

Though Terna’s interest in the latest IPTO tender is considered certain, the company may need to overcome hurdles as a result of the Italian banking crisis, Europe’s latest threat, now surfacing. However, as Terna’s interest is based on a strategic decision to expand its presence in the Balkans, the country’s banking crisis is not expected to influence the decision. But this cannot be ruled out, especially if the Italian banking sector’s issues deepen. Italy’s Deposits and Loans Fund is Terma’s main shareholder.

France’s RTE, an EdF subsidiary, is also keeping a close watch on the IPTO developments. Though the French company is in a better financial state than Terna, European Commission competition regulations could get in its way.

Though the aforementioned Italian and French enterprises rate as the favorites for IPTO’s 24 percent stake, the State Grid of China Corporation (SGCC), which had taken part in the previous IPTO tender, could reemerge.

It has been widely misperceived that SGCC cannot take part as the corporation is a non-EU company. However, SGCC already holds a 25 percent stake in Portuguese energy company REN, acquired in 2012, meaning it can bid for IPTO. Although Chinese firms are generally looking to invest in Greece, SGCC has yet to renew its interest in IPTO.

 

 

Tight schedule for IPTO sale, Terna the likeliest candidate

Italy’s Terna appears to be the most probable candidate for the strategic investor’s role in power grid operator IPTO’s planned split from parent company PPC, the main power utility.

Last night’s ratification, in Greek Parliament, of a multibill carrying additional measures required as part of the effort to complete the first review of the country’s third bailout package, renews the effort to sell IPTO.

The schedule, based on the new law, will be tight, or may even be unrealistic, according to certain pundits. Facing intense time pressure, PPC must need to soon stage a shareholders meeting for approval of the IPTO sale plan, then, one month later, announce an international tender and have selected a prefered strategic investor within five months.

The previous IPTO sale attempt, when an effort was made to sell a 66 percent stake, had lasted nine months without producing binding offers from interested parties. The procedure was then cut short by snap elections.

As for the latest attempt, if the international creditors deem that no substantial progress has been made by October, then the threat of opting for a 100 percent sale of IPTO will reemerge.

The new plan entails selling a 51 percent stake to the Greek stake and 49 percent to private-sector investors, including a strategic investor.

In the previous effort, Italy’s Terna had decided it could offer as much as 400 million euros for IPTO. It withdrew its interest after the Syriza party was elected to power, as the coalition government’s head party, in January, 2015. Even so, Terna has continued to nurture strategic interests in the Balkan region and can be expected to express interest in the latest IPTO tender. The 400 million euro amount it had noted it could invest in IPTO would ensure the Italian operator a stake of between 20 and 24 percent of IPTO, as well as managerial control.

Chinese firm SGCC and Canadian fund PSP, two other investors who had declared an interest in IPTO during the previous effort, do not meet the sale’s prerequisites as they are not certified European operators and, therefore, cannot take part in the new tender. The stance to be adopted by Belgium’s Elia, also present in the previous attempt, remains unknown.

Terna officials remind Skourletis of their interest in 20% IPTO stake

Representatives of Italian operator Terna reiterated the company’s interest in acquiring a 20 percent of IPTO, Greece’s power grid operator, during a meeting in Athens late yesterday with Greek energy minister Panos Skourletis. The Greek government and the country’s lenders have agreed to sell a 20 percent of IPTO.

The Terna representatives, as well as other Italian corporate officials, joined Italian foreign minister Paolo Gentiloni, who was in Athens for an emergency meeting with Greek government officials on the refugee crisis. Bilateral business matters were also discussed during the visit.

Following the meeting at the energy ministry, sources noted that other companies have also expressed similar interest for an IPTO stake.

Besides the 20 percent of IPTO to be offered to strategic investors, the Greek government and the country’s lenders have also agreed for the Greek state to control a 51 percent equity share of the power grid operator, currently a subsidiary firm of PPC, the main power utility. The plan also entails listing the other 29 percent on the Athens stock exchange.

Other Greek-Italian business prospects, in the fields of electricity, natural gas, and hydrocarbon exploration and production, were also discussed during the Italian delegation’s visit to Athens. Officials representing the Italian energy companies Terna, Eni, and Edison, as well as PPC chief executive Manolis Panagiotakis and the top official at DEPA, the Public Gas Corporation, Theodoros Kitsakos, all took part.

In the electricity sector, PPC’s interest to establish electricity production partnerships with other European companies, which would help reduce the Greek power utility’s market share, a bailout agreement term, was also discussed. Italy’s Edison is already active in Greece’s electricity market, both in the fields of production and trade.

As for the natural gas market, DEPA and Edison have already joined forces through their Poseidon venture, seeking to develop Greek-Bulgarian and Greek-Italian pipeline infrastructure. The TAP (Trans Adriatic Pipeline), planned to run from the Greek-Turkish border area and conclude in Italy, via Albania, was also discussed. So, too, were plans concerning the transfer of natural gas from deposits in the east Mediterranean to the EU via Greece. Russia’s latest gas pipeline proposal for the southeast European region, which would replace South Stream, a prospect that also interests Italy, was also tabled.

Italian minister’s refugee crisis visit to include energy matters

Italian foreign minister Paolo Gentiloni’s emergency visit to Athens today, prompted by the refugee crisis, will also include energy matters on its agenda.

A series of meetings scheduled during Gentiloni’s whirlwind visit to the Greek capital include one with energy minister Panos Skourletis. The Italian minister will be accompanied by four Italian energy company executives who intend to remind Skourletis of their interest in doing business in Greece.

According to sources, an official representing Terna will point out that the company remains interested in buying a stake of IPTO, the power grid operator, regardless of whether this is a 20 percent stake the government plans to offer to a strategic investor or a 66 percent share if the Greek government’s proposal is not approved by the country’s lenders. Many officials believe rejection of the government’s IPTO plan cannot be ruled out.

An Edison official is expected to remind of the company’s interest for stakes in units owned by PPC, the main power utility. The company favorably views PPC chief executive Manolis Panagiotakis’s intention to establish partnerships with other European companies for PPC-related projects. However, the Edison official is expected to underline that hydropower plants will need to be included in the overall package.

An Eni representative will raise a compensation issue concerning the premature end of the company’s regional natural gas market monopolies in Thessaloniki and Thessalia, prompted by bailout-related gas market reforms. Eni holds 49% stakes in the Thessalia and Thessaloniki EPA gas supply companies. DEPA, the Public Gas Corporation, holds majority 51 percent stakes in both.

An Enel official is expected to point out the company’s interest to increase its presence in Greece’s wind energy market.

Though no officials representing Snam have joined the Italian delegation, Gentiloni, Italy’s foreign minister, will highlight to Skourletis the Italian company’s interest in acquiring a 17 percent equity share of DESFA, the gas grid operator. Azeri energy company Socar, the winning bidder of an international tender offering 66 percent of DESFA, needs to surrender 17 percent following European Commision intervention.

TERNA in major hydroelectric deal with China’s Sinohydro

A deal between Terna and Chinese firm Sinohydro is expected to be launched on the island of Crete with construction of a large 50MW-capacity hydroelectric facility in Amari, close to Rethymno. At present, Terna holds the largest portfolio of hydroelectric development projects in Greece, through its subsidiary firm, Terna Energy. A number of small 15MW facilities are already operating, while projects amounting to 4,360MW of prospective hydroelectric production await approval. In recent years, the Terna group has submitted over ten applications for approval of large hydroelectric projects totaling over 1,500 MW.

Chinese firm Sinohydro ranks as the world’s 14th largest firm in its field, while it is ranked sixth among Chinese construction firms, based on annual turnover. The firm is active in 55 countries, while its earnings figure in 2012 reached 20.4 billion dollars. At present, the firm’s unexecuted orders list is comprised of 486 projects in 70 countries, worth a total of 42 billion dollars.

The deal between Terna and Sinohydro includes the participation of the Industrial & Commercial Bank of China (ICBC), one of the world’s largest banks.