Tough recovery path for PPC, public service sum slight relief

An announcement in parliament yesterday by finance minister Hristos Staikouras for an upcoming payment to power utility PPC of 200 million euros in public service compensation (YKO), being covered by the state budget and concerning services prior to 2011, signals the beginning of a marathon recovery effort by the utility, needing to cover a 900 million-euro cash deficit.

The size of the company’s cash deficit figure, disclosed last summer by energy minister Costis Hatzidakis and PPC chief executive Giorgos Stassis, promises some financial improvement but the power utility still has plenty of ground to cover to eliminate all fears of collapse.

The imminent 200 million-euro payment to PPC, expected to be received the by the end of January, must, according to latest law, be preceded by action from RAE, the Regulatory Authority for Energy, specifying amounts owed to the corporation. The finance ministry will then give the green light for the payment’s execution.

PPC is believed to be racing against time to obtain documents ensuring the 200 million-euro payment so that this figure can be included in its balance sheet for 2019. Even if it fails to obtain these guarantees on time, PPC will financially benefit from the cash injection in its 2020 figures.

The utility must wait until next September before tariff revisions implemented four months ago make full impact for a vastly improved financial picture. These revisions are estimated to offer an additional 500 million euros.

PPC will also seek additional liquidity through a bond issue planned for the first quarter in 2020. According to a plan prepared by PPC’s previous administration, a loan amount of between 300 and 350 million euros is needed.

In addition, PPC expects to collect at least 300 million euros through the securitization of 1.5 billion euros of unpaid receivables, planned for the first quarter in 2020.

A PPC business plan, to be announced in about ten days, will offer a clearer picture on the utility’s challenging road to recovery. Details on cost cuts and a voluntary exit plan for staff members will feature in the business plan.    elec