By Chryssa Liaggou

Greece’s official creditors are arm-twisting Athens to accept an increase to electricity rates from July 1, threatening otherwise to block the loan by the Deposits and Loans Fund aimed at bolstering liquidity in the local power market.

The representatives of the European Commission, the European Central Bank and the International Monetary Fund -- collectively known as the troika -- have extensively studied the cash-flow problem in the local electricity sector and acknowledged the critical point it has come to, and are now willing to approve the 350-million-euro loan to LAGHE, the electrical energy market operator, and grid operator ADMHE, as well as to Public Power Corporation. The condition they are setting, however, is for the structural aspect of the problem to be solved.

The data that the troika has collected show that the problem is not temporary or just about liquidity, and will therefore not be effectively solved with snap measures. As a result, it will demand a set of terms, the most important of which is the rate hike from as early as this summer. It has also criticized the high guaranteed prices for energy from renewable sources.

The government is seeking a solution to these problems but in a way that would not diminish the positive climate in the renewable energy market, the only part of the energy sector that is still managing to attract investment interest at present.

The troika is adamant about the power rate hikes as out of the recent 13 percent increase only 1 percent went to PPC, and therefore the energy market, while the rest went to cover interest and other utilities. It also insists that there can be no real liberalization of the energy market unless rates reflect actual production costs.