The country’s creditor representatives have expressed concerns over Greece’s NOME-type auction proposal, intended to offer third parties access to main power utility PPC’s low-cost lignite-fired electricity production, describing it as insufficient and not functional, according to sources.
In comments made yesterday, energy minister Panos Skourletis contended creditor representatives have never really abandoned the idea of seeking to part-privatize PPC through the establishment and sale of a segment of the utility, dubbed “Little PPC.”
It now appears that the lenders are now focusing on either resorting to this “Little PPC” plan or turning the pending NOME auction plan into a fixed mechanism intended to liberalize the electricity market, rather than just a transitionary measure.
Last summer’s third bailout agreement had made provisions for NOME auctions as a transitionary measure leading to the market’s liberalization.
The latest lender proposals for the NOME auction plan would provide highest bidders control of production units through their management of market activities. Essentially, third parties would acquire leasing rights for PPC’s lignite-fired production facilities as part of the plan to reduce the utility’s market share by 25 percent in the short term and 50 percent by 2020. According to this plan, PPC would maintain its ownership of units being utilized by third parties as well as management of employees.
This latest proposal by lenders has troubled officials at PPC who consider it a far more detrimental prospect for the utility than the part-privitization option.
Until now, the starting prices of auctions have stood as a major stumbling block in the NOME plan negotiations. Local officials have pushed for starting prices reflecting PPC’s marginal cost to ensure a minimum level of revenues for the utility. The starting price remains a seemingly unbridgeable problem. The problem is made even worse if the drastic reduction of natural gas costs – which has made gas-fueled electricity production units far more competitive, possibly even cheaper to operate than certain lignite-fired units – is factored in.
A highly-ranked energy ministry official had recently warned that major difficulties lie ahead, following the upcoming festive season, with the NOME-related negotiations. The ministry official had made this foreboding comment to local authorities while negotiations with lenders were in progress for a solution to PPC subsidiary IPTO, the power grid operator, now headed for part-privatization.