International arbitration has resulted in Aluminium of Greece paying the Public Power Corporation (PPC) 3.5 billion drachmas (10.2 million euros) in compensation, closing an issue that had been open-ended since 1960 when it emerged that PPC was selling electricity to the company at below cost, sources said yesterday.

The compensation, decided in Brussels yesterday, concerns the period 1999-2001. The decision was based on the fact that competition principles were violated by the contract which forced PPC to sell electricity at a low price.

When Aluminium of Greece was established in 1960 as a subsidiary of Pechiney, political intervention resulted in PPC being forced to sell electricity at low prices to the company. According to the most recent contract, which was signed in 1992 and ends in 2006, Aluminium of Greece is paying 8-9 drachmas (2.3-2.6 cents) per kilowatt (depending on the international price of aluminium) when the production and transfer of this electricity costs PPC 13.5 drachmas (3.9 cents) per kilowatt. This subsidy burdens PPC’s annual budget by about 13 billion drachmas (38 million euros).

The liberalization of the energy market and PPC’s competition with other companies opened the way for the power company to seek arbitration.

PPC sources said the company was examining the possibility of seeking recourse with the European Competition Committee to change the contract that ends in 2006.