Hit hard by increased fuel costs, PPC gains slump by 83 percent
The Public Power Corporation (PPC) is facing financial problems after reporting yesterday an 83 percent dip in 2006 profits. PPC showed profits of just -22.1 million (versus -130 million in 2005) of which -9.1 million came from Larko and another -7 million from a reduction in Tellas losses. In three years, PPC’s profits have slumped 500 percent. The company blames the profit drop on external factors and, more particularly, on higher liquid fuel costs, natural gas and energy prices. Spending on fuel rose by -263.6 million and energy costs shot up 118.3 percent to -523 million in 2006 from -240 million in the previous year. However, the impact of higher fuel prices would not have been the same if PPC had taken advantage of its energy balance. This consists of liquid fuel (5.6 percent), natural gas (16.8 percent) and lignite (67 percent). The fallback in profits over the last three years is in line with the reduced use of lignite in the electrical energy production process. For example, in 2006 there were 3,000 megawatts fewer produced using lignite than in 2005, a drop of 9 percent, causing a -150 million loss for PPC. The poor condition of lignite-powered plants and poor output levels are additional reasons which lead the power company to use more expensive plants or import electric power. Plants going off-line more often due to technical problems are more common – an example being Plant 4 at Ptolemaida, northern Greece, that has been off-line since August 2005 and still does not work. Another decisive factor which determines profit levels is the daily operation of the energy market. Apart from PPC, other participants in the energy market are Hellenic Petroleum – which has its own plant in Thessaloniki – IRON Energy and other wholesalers. PPC buys energy from these producers based on prices that are determined on a daily basis to supply consumers. In November 2005, the average price was -54.2 per MW but moved up to -77.7 per MW in November 2006. The price increase weighs on PPC’s earnings. Additionally, problems in the company’s management have also had a negative impact on its operations. In regards to the other 2006 figures, total revenues rose 11.6 percent to -4.79 billion from -4.29 billion in 2005.
