Offsetting measures as gas market opens up
The Public Gas Corporation (DEPA) is processing a plan to offset the losses of the local gas supply corporations, known as EPAs, in the natural gas retail market, in cooperation with Shell and ENI, the other main stakeholders in the three EPAs in Athens, Thessaly and Thessaloniki.
This plan provides for lengthening of the supply permits as well as the expansion of the geographical areas in which the companies can operate. The aim is to make this plan the main pillar of the bill on the natural gas retail market’s liberalization, which according to the country’s agreement with its creditors should have been passed into law by the end of June.
The Environment and Energy Ministry attributes the delay to the demanding issue of the bill concerning the Public Power Corporation’s part-privatization. Ministry sources say there is no problem with the country’s creditors regarding that delay and that the bill will be submitted to Parliament in the next few days.
One of the crucial issues which the bill must address concerns the offsetting benefits to investors ENI and Shell as well as DEPA, which holds a 51 percent stake in each EPA, as they will lose the exclusive right to supply and transmit natural gas even though this had been secured for a 30-year period with the consent of the European Commission in 2000 (when they entered the market), in an exception to European Union rules.
The investors have asked Athens and the European competition authorities for a period of adjustment to the new status and for a partial offsetting of losses so as to spare the state from a court battle for damages based on Athens forfeiting the contract signed for a 30-year exclusivity.
The lengthening of the permits to supply gas along with the expansion of the three EPAs’ geographical areas of activity appear to have met with the agreement of all private investors. In practice this means that the supply market will open up and consumers will be able to choose their suppliers from between any new companies that enter the market and the existing EPAs, which in the meantime will have proceeded to the separation of their two main activities (supply and transmission). According to the government’s agreement with its creditors, this separation must be completed during the year’s last quarter.
The expansion of the geographical area permits of each EPA, proposed by DEPA for transmission activity, will initially open up the regions of Central Macedonia and Eastern Macedonia and Thrace to the Thessaly and Thessaloniki EPAs, and the region of Central Greece and Evia to the Attica EPA. DEPA had planned for an expansion to those three new regions, but the tenders to set up new EPAs there failed to attract the interest of investors.
From October 1 the government has also undertaken a commitment to introduce regulations for the gradual deregulation of all gas customers, ahead of January 1, 2017, when all domestic clients of the three EPAs have to be freed up – i.e. contracts with the existing gas suppliers will not be binding for consumers should they wish to opt out.
The issue of the changes implemented to the natural gas retail market was the main point of a speech by DEPA chief executive officer Spyros Paleoyiannis on Thursday at a conference organized in Athens by The Economist. Addressing the event, he stressed the market share loss that DEPA is bound to incur.
