A meeting in Athens yesterday between Prime Minister Alexis Tsipras and Socar president Rovnag Abdullayev has helped diffuse the tension generated by a communication breakdown over recent months between the Greek government and Socar officials in the effort to complete the troubled sale of DESFA, Greece’s natural gas grid operator.
Now that the political tension has been appeased negotiations will shift to the sale effort’s technical aspects. The two sides, which have an additional month to seek a solution following an extension to the September 30 deadline, will negotiate through a working group.
The Greek side will be led by the Prime Minister’s adviser Dimitris Liakos and Minister of State Alekos Flambouraris, while Socar’s Vice President for Investments and Marketing Elshad Nassirov and Anar Mammadov, until recently Director General of Socar Energy Greece, will lead the Azerbaijani team.
Socar emerged as the winning bidder of an international tender in 2013 for a 66 percent stake of DESFA. The European Commission eventually intervened to demand that the Azerbaijani company surrender at least 17 percent to a certified European operator, thereby keeping Socar’s stake to no more than 49 percent. Just recently, Greece’s energy minister Panos Skourletis imposed a revenue-restructing measure on Socar to protect consumers. The move angered Socar officials and led to the communication breakdown.
The working group will need to find a solution offering DESFA shareholders a satisfactory dividend yield. Also, DESFA’s network usage fees will need to be raised at a reasonable level so as to satisfy the operator and, at the same time, not overburden the industrial sector and households in terms of energy costs.
Though it remains to be seen how such a balance can be struck, certain pundits believe it is achievable. As previously reported by energypress, DESFA’s network usage fees could be raised by between 30 and 35 percent, instead of 23.8 percent, as had been proposed by DESFA’s board to RAE, the Regulatory Authority for Energy. The operator’s regulations, prior to the Greek energy minister’s recent revenue-restructing measure, permitted a 68 percent network usage fee increase.
The negotiators will also need to work on stabilizing the network usage fee pricing mechanism so as to protect DESFA from any future ministerial interventions that could affect the operator’s revenues.
Skourletis, viewed as an obstacle by Azerbaijani officials, was not present at yesterday’s meeting between the Prime Minister and the Socar boss. Some analysts believe his detachment – from here on – from the DESFA sale effort weakens his political standing. Others believe Skourletis’s exclusion was arranged between him the Prime Minister to boost the prospects of a deal.