PPC considering its regional options

The planned closure of the third and fourth reactors of the Kozloduy nuclear power station in neighboring Bulgaria next year may create power supply problems in southern Balkan countries, including Greece, warned the country’s Economy and Energy Minister Rumen Ovcharov during his meeting in Athens with Development Minister Dimitris Sioufas yesterday. «I have informed the minister that as of next year Bulgaria will not be able to realize the same exports it did in the previous year,» Ovcharov stressed, noting that in 2005 his country exported 8 billion kilowatt hours, 3 billion of which passed through Greece. The closure of the reactors is one of Bulgaria’s commitments ahead of its accession to the European Union, but as Ovcharov stated, any shortages will be covered by the completion of the new nuclear power station at Belene. Sioufas said they agreed on the construction of one more line for the transmission of 400 kilovolts, while discussions also centered on the acquisition of the Bobov Dol lignite power station in Bulgaria by Greece’s Public Power Corporation (PPC). The corporation last year submitted the highest bid in the privatization tender of the Bobov Dol power complex, comprising three plants of 210 megawatts each, but the process was annulled following worker reactions and PPC appealed to the country’s highest administrative court. Sources said they expect a positive outcome. Referring to PPC’s presence in Bulgaria, Sioufas said, «The exceptionally high investment that exceeds 100 million euros will not only connect even further the two countries’ power systems but will also develop a closer relationship in a sector in the framework of the Southeastern Europe Energy Community.» Predictably, discussions included next month’s three-way meeting of Bulgaria, Russia and Greece in Athens on the Burgas-Alexandroupolis oil pipeline. Ovcharov said, «The time has come both politically and financially for this project to be realized.» He also noted that «we should not consider other pipelines as rivals to this one,» adding that «all such projects are realized when the right time comes in terms of politics and finances. PPC business plan Separately, sources said PPC’s business plan for the 2006-2010 period, expected to be officially unveiled at the end of March, is targeting an extensive modernization and the improvement of its lagging financial performance. Integral parts of the corporation’s growth plan include expanding operations abroad and diversification into renewable energy sources (RES). A PPC working group in collaboration with the Boston Consulting Group have classified the corporation’s profit factors into three categories, which are being examined for their margins of improvement. The first category includes controllable factors, such as internal costs and number of personnel. The second category includes the so-called «negotiable» factors, such as tariff rates, which are approved by the government, as well as overtime work and other issues which may have to be decided with PPC’s labor union. The third category includes fuel prices and the price of carbon dioxide per ton, which the corporation has to pay in line with emissions trading rules set by the Kyoto Protocol. As regards tariff rates, PPC, which produces about 96 percent of Greece’s electric power, is said to have decided to ask the government for an 8 percent rise. The Development Ministry, however, is said to be extremely reluctant to endorse such a steep raise, arguing that an increase was granted only last September. But the ministry appears willing to grant an indirect subsidy for the purchase of emission rights. Besides Bulgaria, PPC is also eyeing new acquisition targets in Romania and Serbia in partnership with other foreign power groups, and considering, for the first time, options in Western Europe. It is also seeking foreign and domestic partnerships for expansion in the RES domain. Finally, the corporation is planning the modernization of old power plants.

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