Gas grid operator to be sold to Socar by the end of the month
DESFA’s privatization is in the final stretch, as sources familiar with the process say that the agreement for the transfer of a 66 percent stake in Greece’s natural gas grid operator to Azeri firm Socar will be sealed before the October 31 deadline.
Socar’s stake in DESFA’s new share capital will likely drop below 36 percent eventually as Italy’s Snam has entered the process in order to fulfill the condition set by the European Commission for the Socar stake to be reduced to a maximum of 49 percent due to European Union competition and energy security concerns. Originally Snam had been in talks to buy out 17 percent of DESFA, but it is now discussing the acquisition of at least 30 percent in the coming months.
For the time being, the Greek state will hold the remaining 34 percent.
In talks last week between Prime Minister Alexis Tsipras’s adviser Dimitris Liakos and representatives of Snam and Socar, the final details were agreed on the basis of the new approach of the three sides in the wake of Tsipras’s meeting with Socar chief executive Rovnag Abdullayev.
The basis of the three-party agreement is DESFA’s revised gas tariffs, which have been approved by Greece’s Regulatory Authority for Energy (RAE), with the key points being retrievable amounts in terms of debts to the company created during the period from 2006 to 2015, the time of their recovery, the increase in the gas network’s usage fees, and DESFA’s returns.
RAE has raised the retrievable amounts for 2006-15, as well as incorporated those for 2016, from 285 million euros (which the Energy Ministry’s law amendment had provided for) to 326 million euros while reducing their recovery time from 40 to 20 years. Based on those two changes, the increase in the final cost of the network’s usage fees will amount to 36 percent, against 23 percent that the original plan had provided for according to the ministry’s amendment. The final price of natural gas for industrial use is expected to rise by 2.5-4 percent, depending on the client’s consumption profile.
One of the issues still being discussed by the three sides is the dividend each will get from DESFA’s earnings. The Azeri and Italian companies have demanded that they secure high dividends via an agreement, sidestepping the corporate law that allows for zero dividends.
Regarding DESFA’s revised tariffs, their first application will concern the years 2017 and 2018. Then, in 2018, the first regular tariffs review will take place, with 2017 being used as a reference year for the setting of rates that will apply for the period from 2019 to 2022. The second review is scheduled for 2022, with 2021 as the reference year and the new rates applying for the period from 2023 to 2026.