Uncertainty over lender views on energy reform proposals

It remains unknown whether Greece’s energy-sector proposals in the bailout negotiations meet demands that had been set by the European Commission and its fellow lenders for market liberalization and adjustments complying with EU and energy unification regulations.

As has been well publicized, energy sector privatizations, with main power utility PPC’s part-privatization and IPTO, the power grid operator, at the forefront, are fundamental in the European Commission’s drive aiming to liberalize markets, generate competition, and create a unified European energy market.

According to an article published by Greek daily Kathimerini, the government’s reform proposals for the energy sector comprise natural gas market revisions, a commitment to reshape the CAT system, currently pending, PPC tariff revisions, based on production costs, as well as the adoption of NOME-type auctions by PPC, offering lignite access to private-sector suppliers.

The Greek package of proposals also includes an electricity market roadmap leading to the “target model”, adjusting the local market to EU regulations. It also includes a proposal for full compliance with EU laws in ownership unbundling, breaking monopolies.

Greek officials, according to the Kathimerini report, have also committed to preparing a new legal framework offering support to renewable energy source (RES) enterprises, and implementing energy-sector tax revisions. Another commitment concerns a pledge by the Greek state to settle amounts owed to PPC, as well as financial support and independence for RAE, the Regulatory Authority for Energy.

Greek authorities have also committed to providing a specific development plan for the RES sector and implementing an EU directive concerning energy efficiency, beginning with ratification of related legislation and the introduction of a new plan to upgrade the electricity network with the aim of improving efficiency and reducing costs for all consumer categories.