Utilities too costly
A survey by private company ICAP confirms what we know empirically: that these companies, with a few exceptions, are underperforming money-losers and that they cost the state and, by extension, the taxpayers, most of whom are considerably less well-paid than utilities employees, a lot of money. Out of 48 utilities, very few are really productive, but those that are are listed, such as electricity company Public Power Corporation (PPC) and refiner Hellenic Petroleum (HELPE). These two, indeed, are the leaders in turnover as well as turnover increase, according to the survey. In 2004, HELPE turnover increased 21.3 percent, to 4.5 billion euros, while PPC’s turnover increased 5.8 percent, to 4.1 billion euros. These two companies, by themselves, accounted for over two-thirds of the total increase in utilities’ turnover, which totaled 13.2 billion euros in 2004. They are also the most profitable ones, by far: PPC had profits of 405 million euros in 2004 and HELPE’s profits were 184 million euros. By contrast, the two biggest losers among utilities were Hellenic Railways (OSE) with a loss of 576 million euros in 2004 and bus company ETHEL with 167 million. Overall, utilities have performed less well than private enterprises. While PPC and HELPE have their own problems, especially the former under its previous chairman, Yiannis Paleokrassas, they represent the brighter side of Greek utilities. Most of the others represent a lot of what is bad with both the state and the economy: they are money-drainers often used, and abused, for political patronage, while powerful unions oppose any kind of change. The state has guaranteed billions for utilities that keep borrowing to cover their losses and, last year alone, the state had to pay their creditors 295 million euros in loans they could not pay back. The borrowing needs of all 48 utilities are equal to 1.5 percent of Greece’s gross domestic product (GDP). The government has responded to this situation by passing a bill last month imposing stricter spending controls on non-listed utilities, threatening to withdraw loan guarantees and effectively abolishing lifetime employment for new hirings. Also, the government is determined to put a cap on what it considers very high salaries, especially for utility executives. Yesterday, Deputy Economy and Finance Minister Petros Doukas recommended that utilities further cut their costs and limit their demands for state subsidies. Doukas’s circular, addressed also to all subsidized legal entities, said that «the state cannot undertake the financial burden of all the choices of those who run the subsidized entities» and called on them «to set out their priorities and needs and adapt their budgets.» Doukas also called on subsidized bodies to cut their operational costs and, most importantly, not to divert money allocated from the state budget for wages into operational expenses.
