PPC still to make switch to low-sulfur fuel for its plants

LONDON (Reuters) – Greece’s Public Power Corporation (PPC) is still burning high sulfur fuel oil in its oil-fired power plants, more than 17 months after a European Commission directive requiring a switch to low-sulfur oil, company and Greek government officials said. The EC rule came into effect on January 1 last year with the goal of reducing sulfur dioxide emissions in the region by imposing limits on the sulfur contents in fuel oil and other oil products. The switch prompted power generators such as Portugal’s Electricidade de Portugal and Italy’s Enel to boost demand for low-sulfur fuel oil, increasing prices of the product. Mediterranean free-on-board (fob) cargo prices for low-sulfur fuel oil have averaged about $166 a ton since January 1 2003, compared with about $129 a ton during the two years before that. PPC, which generates 96 percent of Greece’s electricity, has yet to switch even after the EC in December 2002 rejected a request by the country to defer implementation of the low sulfur requirement. The company, which produced 52.2 Terawatt-hours (TWh) of power last year, generates 15 percent of its electricity using oil-fired plants. «PPC currently uses high sulfur (3 percent) fuel oil and the switch to the low sulfur one (1 percent) is not yet specified,» D. Anagnostou, head of planning in PPC’s generation division, told Reuters in an e-mail. The EC said it expects all the region’s power plants to be complying with the ruling already. «We presume Greece is fulfilling the directive as it should,» said an official at the EC’s Environment Directorate-General. The official said the EC may open legal proceedings against countries that it finds are not complying with the ruling. Greece appealed the EC’s rejection of its request and is awaiting the Court of Justice’s decision, said an official at the country’s Regulatory Authority for Energy. «Even with the court case, Greece has no reason not to fulfill its obligations,» the EC official said. The country, whose capital Athens is to host the Olympic Games in August, is already one of eight EU states being taken to court by the EC for missing a 2002 deadline to implement a host of EU laws on air quality to limit smog and breathing problems. Greece may be prolonging the burning of high-sulfur fuel oil to benefit from its lower cost relative to low-sulfur fuel oil, and because Greece’s refineries are not equipped to produce the lower sulfur oil, traders said. «They gain so much by not buying low-sulfur fuel oil» one south European trader said. «Even if they’re fined, it’s worth it.» High sulfur cargoes have averaged about $140 a ton fob Med since January 1, and $112 a ton during the two years before that. Greece’s refiners are also not equipped to produce low-sulfur fuel oil, traders said, meaning a switchover would force PPC to issue buy tenders for low-sulfur fuel oil, boosting demand for the product. The power generator currently buys most of its fuel oil from Hellenic Petroleum, which holds the bulk of Greek refining capacity and share of oil product sales.