Having taken over at the helm of ADMIE Holding – the company that controls 51% of Greece’s Independent Power Transmission Operator SA (ADMIE) – in March, Ioannis Karampelas, talks to Kathimerini about the firm’s role.
The listed company, Karampelas says, is on the cusp of adopting the new, bolstered framework for corporate governance, though he stresses that all major businesses – and not just listed ones – should make a voluntary commitment to the principles of good governance, especially when the state is a major shareholder.
The new investments being carried out by ADMIE, worth a total of 5 billion euros, will multiply the company’s asset base but will also bring inevitable increases in consumer rates, Karampelas says.
On the other hand, he adds, interconnections will also bring accumulative benefits, as they will contribute to the closure of Public Power Corporation’s lignite plants and lead to a reduction in carbon emissions charges.
You recently took over as chief executive officer of ADMIE Holding. Would you give us an outline of the company and its role?
The sole asset of ADMIE Holding is its 51% ownership of the shares of the country’s Independent Power Transmission Operator (ADMIE). The holding company’s role is to promote and support the operator’s vital work in order to project the image of the group as a whole. To do so is important not only for our share price, our shareholders and investors, but for all of us, as the operator’s work and image directly concern us as citizens of our homeland.
Is harmonizing ADMIE Holding with the provisions of the Corporate Governance Act voted on last summer meaningful per se, given the company’s small size? Should ADMIE also adapt to the new framework, despite the fact it isn’t public?
To start with, it is not a matter of size, but of the assets the company manages. ADMIE Holding’s capitalization is at 625 million euros and its shares are listed in the index of large cap stocks that trade on the Athens Stock Exchange. The fact that ADMIE shares are traded on the ASE means we have to comply with the provisions of the law, but we would have done so even if we were not obliged, for our values are directly related to the principles of transparency in doing business and of environmental and social responsibility. Let us not forget that results do not come on their own – there are no results without the people that achieve them.
The law does not bind unlisted companies to the same obligations; I strongly believe, however, that all big companies should voluntarily commit themselves anyway, especially when their majority shareholder is the state and their management has been appointed by the government. Caesar’s wife should not only be honest, but should also appear to be so.
Does the road to energy transition pose serious challenges to ADMIE as the network’s operator? Is the company prepared to face them?
The ADMIE Group has set energy transition as one of the top priorities of its 10-Year Network Development Plan for 2021-30, which also includes developing the interconnections with the Greek islands, which means that costly and environmentally unfriendly local power generation units that use diesel will be eliminated. Further development of international interconnections will achieve the same goals. Above all, however, we see that the Energy Ministry’s leadership has taken solid steps toward the development and penetration of renewable energy sources (RES). The legal framework for offshore wind parks, development of storage units and the interconnectivity of RES with the country’s central electricity network is already under way with obvious results, as RES contribution to the network hit a record 35% in 2020, whereas that of lignite dropped to 11%.
How is ADMIE’s guaranteed income performing today in comparison with that of other European operators? Do you believe that if the Energy Regulation Authority (RAE) reduces it, that will be reflected in the company’s share price?
ADMIE is currently in the process of implementing a 5-billion-euro development plan over 10 years, which makes it if not the largest, certainly one of the largest investors in Greece’s energy sector. In essence, we are talking about the doubling of its asset base; as this investment program is progressing at a steady pace, so will increases in electricity transmission charges. The fees ADMIE receive over its total asset base are higher than those that other European operators receive and one of RAE’s top priorities is certainly to gradually harmonize and improve noncompetitive activities by taking international practices into account. At the same time, however, RAE provides motives for the timely completion of projects of major national significance without exceeding their budget. These projects will take up most of our investment budget for the coming years. At this point I would like to emphasize that, at the moment, all electricity consumers in the country are burdened with public utility service charges in their bills. This is due to the continued use of polluting electricity generators on the islands. But when our 10-Year Network Development Plan gradually connects the islands to the mainland system, these units will close down, resulting in tangible savings for consumers. This is especially so since 2019, when the government’s active support allowed ADMIE to greatly increase its investments, which rose to approximately half a billion euros in 2020, €250 million in 2019 and €178 million in 2018 as juxtaposed with a mere €70 million in 2017. On the other hand, of course, any uncertainty over the guaranteed income could generate justifiable question marks for our investors.
How did the shareholders react to the fine imposed by ERA on ADMIE regarding the delays on the West Peloponnese Corridor project? This poses a question mark, as ADMIE showed no flexibility on the alternative routing of the project, i.e. bypassing the Monastery of St Theodore, whose reaction has blocked the project in the court.
Almost half a billion euros was invested in 2020 in developing infrastructure and more similar investments are scheduled for the coming years. When it comes to projects of this magnitude, there are bound to be delays caused by external factors. This is something our shareholders understand and so there were no reactions or concerns.
ADMIE recently completed a flagship project for the country and one of the most innovative on an international scale, the interconnection of Crete with the Peloponnese. What are the reasons that, despite having been successfully tested, the project is not yet operational?
What is important is that the project was completed within schedule, despite the serious technical challenges it presented. Let us not forget that this is a project of world records: the longest undersea high-voltage cable connection (174 km), the longest undersea high-voltage tripolar cable connection with XLPE insulation (132 km), and the deepest undersea high-voltage connection for the same cable (1,000 m). Plus, not only was it completed, but, as you correctly pointed out, it was successfully tested and is ready to function.
Procedural issues regarding the time of operation – such as the regime of the substations, for example – will be solved in order to proceed with what’s more important: achieving Crete’s energy independence and eliminating environmental pollution. Crete can and must have zero carbon emissions.