PPC told to cut spending by 500 mln euros this year

PPC told to cut spending by 500 mln euros this year

The McKinsey consulting group has warned the management of Public Power Corporation about the electricity giant’s viability, recommending a 500-million-euro cut in expenditure within 2018 that would include expanding its voluntary exit program from 110 million euros today to 250 million euros.

The company hired as a consultant for the utility’s new business plan made a provisional presentation to the PPC board on Tuesday regarding the corporation’s financial situation, during which it sounded the alarm: The loans to operating profits ratio is not sustainable, McKinsey said, calling for cuts of at least half a billion euros.

The consultancy also underscored the issue of unpaid bills, which remain at the particularly high level of 3 billion euros, including dues that have been entered into a payment scheme. It further warned that for lignite – the main type of fuel PPC still uses – to remain competitive, regulatory support is needed, and promised that it will table more specific proposals in the coming months.

PPC on Tuesday extended McKinsey’s contract, which expired this month, for another four months, paying 400,000 euros.

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