Battered PPC still owed 200 to 250 mln€ by Greek state; Commission: power rate hikes necessary

Friday, 07 June 2019 14:00
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By K. Deligiannis 

Arrears owed to the Public Power Corp. (PPC) of between 200 to 250 million euros, dating to 2011, related to public utility offsets, remain "up in the air", exacerbating the debt-laden and liquid-starved electricity utility.

Just as ominously for the still state-run power utility - once Greece's absolute monopoly in the electricity sector - the Commission's third post-bailout report on the Greek economy and finances refers to a need for an increase in PPC's rates, both in order to immediately improve finances but also to boost competitiveness, as it says, in the country's energy market, which is gradually but continuing opening up.

One immediate repercussion from the Commission report came on Thursday, when the ATHEX-listed company's share on the Athens Stock Exchange (ASE) shrunk by 8.16 percent.

According to reports, the relevant environment and energy ministry will not table a draft amendment in Parliament on Friday - probably the last day of sessions for the current SYRIZA-majority plenum - a necessary step, followed by ratification, for the process to cover the arrears to commence.

As far as PPC and the Greek energy market is concerned, the Commission notes:

"Progress with the implementation of energy market reforms has slowed notably during the past few months. The divestiture of PPC’s lignite plants (a delayed end-2018 specific commitment) was relaunched after the first deadline resulted in no bids being accepted. A new timeline had been agreed which should close by the end of June 2019, which should include a fairness opinion on any offers. A unilateral decision extending the process deadline to 15 July 2019 was made by PPC following consultation with the Ministry of Energy and Environment, and as such, the closure will not be made within the agreed deadline.

"Whilst Greece has made some initial steps towards the introduction of the target model for the electricity market (mid-2019 specific commitment), it seems clear at this juncture that the go-live of the intraday, day-ahead and balancing markets, already delayed from the initial plan of April 2019, will not occur until 2020. These delays will have knock-on effects for Greece’s coupling with the neighbouring markets of Italy and Bulgaria.

"...Meanwhile the NOME electricity auctions continued with its allocated quantities, and the delays to the lignite divestiture meant that a planned correction mechanism was not triggered. On a positive note, PPC’s market share has slowly receded to below 77% in March 2019, down from 80% at the time of the last enhanced surveillance report but still some way off the original programme objective of PPC’s market share going to below 50% by 2020. The recently-released 2018 financial results for PPC show a strong decline in profitability and a worsening of cash flow issues, which calls for determined efforts to address structural issues, including pricing policy and arrears collection."

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