Power market opener

Under EU legal pressure the government this month will bring to Parliament a draft law liberalizing Greece’s electricity market, long dominated by the PPC state monopoly, but industry officials said it will not free the market soon. The bill allows private investors to bid for creating two or three energy production plants with a capacity of up to 900 megawatts (MW) – excluding PPC – with newcomers able to sell to consumers from mid-2007. «PPC will no longer have access to new production licenses. From now on, it’s time for private initiatives according with the EU framework,» said Development Minister Dimitris Sioufas, adding the tenders will finish by May 2006. But analysts and investors say this falls short of a true liberalization because it keeps tariffs under state control and does not end PPC’s favorable treatment – exclusive access to cheap lignite. «The newcomers cannot possibly sell cheaper than PPC,» said Andreas Diamantopoulos, business development manager at the Copelouzos Energy group. «PPC is using lignite fields almost for free because the state has granted it these rights.» The European Commission said in July Greece was among EU states that would be taken to the bloc’s top court for failing to pass legislation implementing EU-wide policies to free up the energy market. Analysts said any real reform would hinge on what incentives the new investors will be given to offset PPC’s advantage. «The entry of new investors in the market depends on the government’s intentions to give them special motives and lower the production cost of the new units,» said Vassilis Roumantzis, analyst at Egnatia Finance. Government officials would not respond to the market’s criticism of the draft bill, saying the potential investors were apparently pushing for more benefits. «They are trying to get the best possible conditions for their companies,» said a Development Ministry official, who requested anonymity. State-set tariffs, especially during efforts to control inflation, are another problem, analysts say, as raising consumer electricity prices is a politically costly measure. «The only hope for private investors to enter the market now is any last-minute changes to the draft bill and better terms,» said Diamantopoulos. (Reuters)

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