Prime Minister Antonis Samaras presented a clear privatization plan for Public Power Corporation (PPC) last week that included the sale of production plants. He used the occasion as an opportunity to express his determination to see through reforms demanded by the country?s international creditors which have stubbornly remained in the planning stage. The prime minister has set as a priority the most emblematic of privatizations from a program he must implement without delay and despite certain union protests.
The energy market was particularly pleased with the premier?s announcement for PPC?s part-privatization, along with the government?s policy program made public last Friday, and is keenly awaiting its application in the hope that there will be no backtracking or compromises in the process, fears of which have been expressed by various sources, given the fragile composition of the new government and despite strong pressure on the part of the country?s creditors.
The industry considers Samaras?s direct reference to the sale of PPC?s production capacity as very positive, stressing that never before has there been a clear plan for the company?s privatization that goes to the root of the problem in the energy market. It is no secret that all the distortions in the electricity market stem from private investors? inability to gain access to cheap lignite fuel and the friction this has caused between Athens and the European Commission.
Brussels has effectively been demanding that Greece press ahead with the sale of lignite plants to private investors since the summer of 2010, but previous governments kept finding ways of avoiding the sell-offs, resulting in problems piling up and taking PPC and the whole energy market to the brink of bankruptcy. There is no margin for negotiations or patchy solutions and this has apparently become clear to the new government, which intends to use the PPC privatization to attempt to resolve the key issue of the market?s liberalization, not just to satisfy the Commission?s demands but also for the viability of the sector. It is no coincidence that Samaras has linked the sell-off with a strategic plan for the opening up of the energy market.
Although the competent ministries have not presented a detailed plan regarding the sale of PPC production units, it seems it will be based on the model that Italy?s Enel applied in 1999 to open that country?s market to competition, as Samaras made clear during his speech in Parliament last week.
Until that year, Enel had enjoyed a state monopoly on electricity generation, but was forced by law to sell 30 percent of its production capacity. This laid the groundwork for the opening up of the market and, with the cash flow it secured, allowed Enel to expand to foreign markets and transform itself into one of the dominant players in the single European market.
Greek market experts say that applying this model in Greece will need to take into consideration the Commission?s demand for the sale of 40 percent of PPC?s production capacity to private investors, as well as discussions for the sale of four to six units, at Meliti (near Florina), at Megalopoli, at Aghios Dimitrios, at Kardya and two at Amyntaio.
The plan, which may also include hydroelectric plants, is expected to be completed by spring 2013 at the earliest.