Public Power Corporation: A much abused company

Public Power Corporation: A much abused company

In the 1980s, the use of renewable sources to produce energy on an industrial scale was in its infancy. Sweden was worried about climate change, Denmark had recently taken its first steps in the construction of wind turbines with the 200-kilowatt Gedser mill (1959-67) and Japan was experimenting with photovoltaics. 

All this sounded somewhat quaint or plans for the distant future, seen from a period of depressing coal monopoly. But it wasn’t. Some in Greece understood the problem, such as the country’s biggest power utility, Public Power Corporation: PPC had already included wind turbines in its five-year program for 1983-87, while at the same time it was initiating efforts to generate electricity from geothermal energy on the island of Nisyros. It was one of the first in the world to read the future correctly.

But it was prevented from moving forward.

Although PPC was a monopoly, it was bleeding financially. And while it was first to come up with plans for renewable energy, it was left behind.

Why did this happen? PPC was used by the state as a political tool. For decades, it forced the company to borrow from the markets and hand over the proceeds. It hired armies of cronies who lacked useful qualifications. It pursued a clientelistic pricing policy. It was also used by private interests who destroyed the company’s finances to multiply their gains. Political money disorganized and weakened it. PPC was also used by special interests which (with the exception of the lignite miners’ unions in Ptolemaida) are called trade unions as a euphemism.

The big picture, is that we have the most expensive electricity in Europe and a “sick man” – PPC. Governments came and went, and the situation steadily deteriorated. A few years ago we came close to a full blackout.

It has been announced that PPC will proceed with a share capital increase worth around 750 million euros by the end of the year, in which the state will not take part, reducing its share to a minimum of 34%, although it will continue to select the management of the company. 

The goal is to use the revenue, along with the 1.3 billion euros it will receive from the sale of a 49% stake in Greece’s sole power network operator, DEDDIE, to modernize its network, and perhaps buy some power plants in the Balkans. But the main aim is to increase its share in the green energy market. Securing a significant position in the market will require a lot of money because whoever is late to the game has to pay dearly for the “entrance fee.”

I hear accusations of a “sell-off” and “privatization,” when, in fact, PPC has been told to absorb price increases.

The timing of the increase is problematic. But it may be that the timing was chosen so that PPC can also subsidize part of the increased energy costs incurred by consumers. And I don’t understand why it is bad for the state-appointed administration to be controlled by 66% and not 49% of the shareholders. I also believe that it would be a “sell-out” to keep PPC out of the clean energy market, to let it waste away as private interests gain ground. 

“Privatization” would be to choose a share capital increase that does not ensure that no one acquires a majority stake – as is the case now – or to choose the alternative of the strategic investor. To sell, for example, a large number of shares to Italy’s Enel (which is interested in PPC) along with the management. This is not the case with the current plan. With 34% of the shares, the state is dominant (entire multinationals are controlled by only 8% or 6% of the stocks).

Therefore, those on the Left who think they are criticizing should be careful. Going too far toward the Left, you end up on the Right.

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