PPC to plug liquidity gap with 960-mln-euro loan

Greece’s biggest power utility PPC said on Friday it would sign a 960 million euro bank loan next month to cope with a liquidity crunch caused by austerity-hit customers dodging their electricity bills.

The move will allow state-run PPC to refinance a large chunk of 1.12 billion euros ($1.12 billion) of debt expiring later this year as it struggles with record losses, higher fuel costs and poorer consumers.

“The board of directors has…approved the terms of a syndicated loan of an amount of 960 million euros,» the company said in regulatory filing. It did not provide further details. A company official said the loan would be sealed in May.

PPC’s shares were up 4.8 percent at 1015 GMT in Athens, outperforming a 0.5 percent rise in the general bourse index .

PPC already struggles with stagnating power demand and higher fuel costs. But its problems were aggravated when the cash-strapped government decided to use the company as a tax collection vehicle to meet its revenue targets under an EU/IMF bailout, bypassing its own inefficient tax officials.

In September the state started collecting a 1.7 billion euro property tax through electricity bills, threatening to cut the power of households and firms who failed to comply.

Non-payment has nevertheless soared since January, as the economic crisis deepened and public outcry against the move forced the government to soften its stance, restraining PPC from cutting dodgers’ power and giving them more time to pay.

The government’s back-pedalling «led to a sharp reduction of power cuts in the first quarter and in turn, to the increase in overdues,» PPC said without giving details.

PPC had said in December, before the government softened its stance, that bill collection was going smoothly.

The company said on Friday it expected to overcome its liquidity shortfall later this year, helped by the bank loan and electricity price increases that took effect in January.

Earlier this year PPC also won back about 200,000 clients it had lost to two smaller, alternative power retailers that went bust due to the crisis.

As a result, PPC again controls almost 100 percent of the country’s retail market for electricity. In the wholesale segment PPC’s market share has declined to 75 percent after other energy companies such as Hellenic Petroleum and Mytilineos set up their own power plants.