Ongoing negotiations between Greek government and Azerbaijani energy company Socar officials in search of a final agreement for the troubled sale attempt of a 66 percent share of DESFA appear to be making progress.
Socar recently extended an expiring letter of guarantee by a month, giving the two sides until the end of this month to reach a deal.
A first decisive step in the renewed effort, following a standoff, was taken last Friday when Greek authorities endorsed revisions to DESFA’s pricing policy terms in a bid to bridge the gap separating the Greek government and Socar.
The revisions offer an improved WACC (Weighted Average Cost of Capital) performance at DESFA, as well as leeway for greater network fee hikes following limits imposed in the summer.
RAE, the Regulatory Authority for Energy, recently decided on a network usage fee hike of between 30 to 35 percent and expanded DESFA’s time period for recovering previous amounts by a year. This new period covers 2006 to 2016, while the previous plan covered 2006 to 2015. The move increases the recoverable amount to 326 million euros from the previous figure of 285 million euros.
According to energypress sources, Greek officials are expected to offer more improvements to encourage a deal. Socar, seeking further enhancement of the DESFA investment’s prospects, has asked for more revisions.
Some sources contend the Greek government has already given its green light for a successful completion of this long-running sale.
Socar emerged as the winning bidder in 2013 for a 66 percent stake of DESFA at a price of 400 million euros. Last year, the European Commission intervened by ordering Socar to surrender at least 17 percent to a certified European operator, limiting the Azerbaijani company’s involvement to no more than 49 percent. The recent ratification of revenue-limiting measures prepared by the Greek energy ministry for DESFA, designed to protect consumers, prompted Socar to take big step back.
Should the talk, by some, of a finalized agreement by the end of this month be proven true, then Italy’s Snam is expected to acquire the stake to be surrendered by Socar.