Greece’s two oil refining groups, Hellenic Petroleum (ELPE) and Motor Oil, are poised to take advantage of the deregulation of the country’s power production market. A third group, Hellenic Technodomiki, the largest in construction, also seems to be preparing for entry, attested by its recent hostile takeover bid for Rokas, which is a leader in the renewable energy sources segment. In spite of the interest expressed by private companies to develop a productive capacity totaling 3,892 megawatts of electric power, experience in the Greek market to date proves the global rule that «power production can be undertaken by very few, very powerful players,» being a capital intensive industry. Among the rest of the groups that received licenses to produce power three years ago – Kopelouzos, Mytilineos, TERNA and Alamanis – the materialization of their plans will depend upon their ability to secure funding, in spite of their having received guarantees from the independent Hellenic Transmission System Operator (DESMHE) for returns of up to 70 percent on their invested capital. DESMHE’s guarantees work in fact as an indirect subsidy, which the Greek government found expedient in order to bolster investor interest in power production. The development of private power production in order to end the monopoly of the Public Power Corporation (PPC) has been dictated by European Union legislation. ELPE and Motor Oil are in fact pushing ahead with their investment plans. ELPE is building a 390MW production facility in Thessaloniki and Motor Oil a 395MW power plant in Aghioi Theodoroi, west of Athens. The two units are expected to become operational by 2005. Meanwhile, Hellenic Technodomiki has acquired through its subsidiary HE&D and in cooperation with Sidenor, a member of the metallurgy group Viohalco, a license for the production of up to 440MW in a planned facility in Thisbi, central Greece. The Technodomiki group has also obtained permits – through its subsidiary Energiaki SA – for the production of wind power of up to 260MW. Through its recent hostile takeover bid for Rokas, the group is also seeking to secure a top position in the promising market of renewable energy sources. DESMHE’s tenders, anticipated in the near future, are expected to lead to two or three new investments, depending upon the final decision of whether the 900MW production planned to be added to the grid by 2007 will be shared by two or three different production plants. The most likely scenario refers to three such facilities, in order to satisfy a larger number of the investors who have already secured production licenses – and who will be the only ones eligible to participate in the planned bidding process. At this stage, other investors who wish to enter the power production market would have to cooperate with companies that have already secured production licenses. But market sources report no such interest from local companies, while large, foreign groups, approached by certain Greek investors are said to be rather negative. The Latsis Group, now a main shareholder in ELPE and holding a preferential first option to buy a further tranche of shares from the government, is expected to take advantage of the planned block sale of an 8.2 percent now held by the Public Portfolio Management Agency (DEKA) in the form of a convertible bond. «Latsis arrived as a strategic investor in ELPE and does not intend to be limited to a 25 percent share in the group,» according to industry sources. DEPA The Public Gas Corporation (DEPA) is viewed as almost certain to become active in the power production market in the future, and its candidate strategic investor, Spain’s Gas Natural, is also reported to be considering the options. Meanwhile, other European giants, such as RWE and EDF, seem to prefer to wait for the formation of a basic free market structure, or for bold political decisions regarding the sale of power plants of PPC, or an invitation from a strategic investor within the current monopoly. In any case, they have no reason to rush while experience in other markets shows that their moves can be sudden, hostile and effective. In the near future, it is clear that in the race to meet the daily requirements of the Greek market, the main competitors will be PPC, with its installed capacity of about 12,000MW, the private groups which will produce the 800-900MW and for which licenses have already been issued, and the nine companies which have secured licenses to import energy. The DESMHE tenders are expected to be issued after September. Meanwhile, officials at the Development Ministry seem confident that Greece will face no power supply problems in 2005. This is owed in a large part to the expected additional production capacity of 800MW, now being developed by ELPE and Motor Oil, as well as the additional 400MW production by PPC’s plant in Lavrion.