Greece plans to spin off 30 percent of power utility PPC

Greece has added some detail to a long-overdue plan for energy market liberalisation, saying it would sell about a third of the production capacity of power utility PPC to a private competitor in about two years.

Athens has been planning for years to transfer part of the 51 percent state-held company to rivals, aiming to spur competition in its ailing electricity industry.

But the PPC privatisation acquired a new urgency this week after the country’s international lenders said they wanted to see a concrete plan for the measure as a condition for releasing further rescue loans under Greece’s 240 billion euro EU/IMF bailout.

In a draft report obtained by Reuters on Monday, the lenders criticised Athens for moving too slow on the asset sales it needs to cut its outsize public debt.

PPC sits at the pinnacle of a chronically over-regulated and under-funded energy system, which has been brought to the verge of financial collapse by the debt crisis.

“Planning energy policy is necessary for economic growth,» the energy ministry said on Wednesday. «We must avoid new liquidity crises … and improve competition».

PPC generates about two-thirds of Greece’s electricity output and controls almost 100 percent of the retail market with annual sales of about 6 billion euros.

It is also one of the world’s biggest miners of lignite, a soft, brown coal seen as a heavy environmental polluter.

The company has an installed capacity of 12,500 megawatts (MW) with about 100 power units. Coal-fired plants account for 39 percent of total capacity, hydro-plants for 24 percent and natural gas-fired plants 16 percent.

PPC will transfer to its privately-run spin-off about 1,400 MW of coal capacity and 500 MW each of water and gas-fired units, the ministry said. The exact amounts will be set by the end of June.

Under the plan, Greece would then sell a 17 percent stake in the rump PPC to other private investors by early 2016.

Athens also plans to sell by the end of this year up to 49 percent of power grid operator ADMIE. The operator’s buyer would be obliged to expand its stake by mid-2014, with Greece retaining a 34 percent minority.