Private power sector faces an uphill struggle

The government appears to be placing high hopes on the effective deregulation of the power market and is making haste to bring in private producers before the next election, due by May, possibly anticipating political benefits. A recent revision of the institutional framework sets a target of additional capacity of 900 megawatts by private producers by 2007 and a further 400 MW by a consortium with 50 percent participation by the Public Power Corporation (PPC), which still produces more than 95 percent of the country’s power. However, the hoped creation thereby of a nucleus of competition appears quite likely to block deregulation, since the new large investors, who will probably given favorable terms, will secure strategic advantage vis-a-vis others whose entry is not facilitated by the recent revision. For the 900 MW segment, the law provides for two tenders in which only those who have already obtained licenses have a right to participate. These are ENELCO (a consortium of the Kopelouzos group and Italy’s ENEL), the Mytilineos and Stasinopoulos groups, state-controlled Hellenic Petroleum and GEK Terna. Despite this prospect, some of the prospective participants are not happy. «The new law has hastened to cover PPC in the best possible way,» says Yiannis Mytilineos in reference to the government’s recent licensing of PPC for a new power station in Lavrion, which will make it even more competitive. The private groups complain of a lack of credibility on the part of the Regulatory Authority for Energy (RAE), whose chairman, Pantelis Kapros, is said to have threatened to resign if PPC was licensed for the Lavrion plant. «When 10 people from the energy sector leave a seven-hour meeting with RAE officials and each has understood a different thing, you realize the size of the prevailing confusion,» said a representative of one of the groups. Andreas Diamantopoulos, of the Kopelouzos group, describes the new framework as unclear and predicts that the coming tenders will fail if serious incentives are not provided to make the investments viable in the long run. He says the authors of the new law did not consult with the industry. «Others legislating for our money is just not on… there is no political will for real deregulation,» he says. This is only possible if PPC sells some of its plants to private operators, as ENEL did. The proposed Hellenic Petroleum plant in Thessaloniki is viewed as the most likely to make progress soon.