The Finance Ministry is scrambling to boost the ebbing liquidity of the Public Power Corporation (PPC) by allowing it to retain 200 million euros of the emergency property tax that is collected via electricity bills, sources say.
The sense of urgency is fueled by the fear that the repercussions of the possible bankruptcy of Greece?s once most financially robust industrial concern will spread throughout the country?s flagging power market.
According to the same sources, PPC has notified the government that its cash deficit is unmanageable.
In the next few days, Finance Minister Filippos Sachinidis is expected to ask Greece?s international creditors, the European Union, European Central Bank and International Monetary Fund (known collectively as the troika), to approve a cash injection for the Greek power grid operator, LAGHE, with a 300-400-million-euro loan. It is feared that without these moves the financial stringency of the two organizations will ultimately impact the Public Gas Corporation (DEPA) -- which will in turn not be able to pay its international suppliers at a time when it is being prepared for privatization.
PPC?s cash deficit increased by 350 million euros in the first half, jumping to a total of 1.16 billion euros. The biggest part of this is accounted for by unpaid household bills, which rose from 440 million euros in December to 760 million at the end of March. PPC sources attribute the steep rise to the unpaid bills which contained the emergency property tax and the government?s decision to extend the deadline for payment from 80 to 120 days. Part of the blame is also attributed to the ruling by the Council of State -- the country?s highest administrative court -- that the corporation is not allowed to disconnect the electricity supply of those that do not pay the aforementioned bills. The sources note that in the October-November period -- that is before the rulingvconsumers paid their bills even earlier than usual. They forecast that the problem will increase as regards the bills due to be paid this month as a result of the higher electricity consumption in the winter months.
?The problem begins from the electricity bills, which have been burdened with many taxes and levies that the consumer cannot pay. It impacts us first, but because PPC is the market leader, it spreads throughout the sector,? said a senior official.
He reveals that since the beginning of the month the corporation has halved its payments for the energy it buys from the system.
?We cannot do anything different. We have exhausted all means of delay with the subcontractors since the beginning of the year. We are running the risk that they will stop working in the lignite mines because they have not been paid. I do not know whether this situation can be stabilized. If a solution is not found, the entire electricity market will collapse,? the official warned.
Regarding the refinancing of PPC loans totaling 5 billion euros, officials say negotiations with Greek banks for a syndicated loan of 600 milllion euros, which may rise to 1 billion to cover debt repayments, are in the final stretch. The corporation was not in a position to repay debts of 700 million in March and most of these have been rolled back to June.
Separately, apart from PPC, DEPA is also owed 300 million euros by customers, while the LAGHE deficit comes to 500 million.