By Seraphim Constantinidis
Temperature rises across the world mean a surge of demand for power from air conditioners, which should be good news for any energy monopoly. Not so in Greece, though, where the Public Power Corporation (PPC) is fearing the collapse of the grid on a hot day like today, yet its president, Yiannis Paleokrassas remains positive.
In an interview with Kathimerini, he states that “we are in the crucial set of days, but the efficiency of the system has improved since last year’s partial blackout (on July 12), we are optimistic and are monitoring the situation.” All stations are operating, he says, but the problem is that in the last few years there was no power production potential above the 400 megawatt capability of the Lavrion plant. “We have improved the carriage and distribution system, though, and this has reduced failures,” he adds.
He seems equally calm on the issue of Greece’s delay in liberalizing its energy market, which has landed it in trouble with the EU, with the European Commission having started proceedings against Athens. “PPC is ready for the liberalization of the energy market and we are expecting it as a positive prospect. We want it because it will assist in creating an effective policy, boosting competition both in Greece and abroad,” he suggests.
“In Greece today there is only one non-state plant operating as a reserve unit, while at the end of the year, the plant of Hellenic Petroleum (ELPE) will start operating in Thessaloniki. PPC is helping substantially with the completion of this unit and its linking with the country’s grid,” notes Paleokrassas, assuring that “we will do for other private plants everything we have done for ELPE, just as we help wind power units.”
Competition from abroad is also strengthening. “We want to increase our interconnections with other countries. At present, we have a 600 MW link from our northern borders and 500 MW with Italy. We are constructing a 400 MW line with Turkey and expect to double the link with Italy, while assisting the competent authorities in the Former Yugoslav Republic of Macedonia (FYROM) so that next year the line linking [the northern Greek city of] Florina with FYROM will be operating,” the PPC president told Kathimerini.
The Lavrion case
Paleokrassas says he decided to refer the company’s previous administration to justice about projects and procurements, such as Lavrion, when he realized some things happening were not right and asked for an internal audit, although the former administration did not agree. “I could not just sit by doing nothing and felt I would be found guilty of papering these things over,” he explains. The first trial about allocating the Lavrion project to METKA has found the former administration not guilty of breach of faith.
“Just as in Enron’s case in the US, I believe transparency is crucial. Right now at PPC there are committees planning and modernizing regulations for project and procurement allocation, using as their main criterion the achievement of the greatest possible competition, transparency and fair treatment. Another committee is forming proposals for restructuring the entire internal control system, according to current corporate governance regulations. This will have direct benefits. PPC is still operating according to 1980s standards and that has to change,” says a determined Paleokrassas.
So why is the opposition so vehemently against it all? “I imagine the opposition has to do something to show some activity and has chosen me because I undo the complacency of entangled interests. I cannot rule out that these interests want to intimidate not just me but also all other chairmen and governors of state corporations and banks that face similar problems,” he thunders.
Paleokrassas is not happy with the sluggish course of its stock. “Yet it is not true that the sale of a large package of shares by Fidelity was due to the change in PPC’s administration. Still, this sale showed the stock’s strength, as demand exceeded supply and shares were sold with no reduction in the stock market price,” he recalls.
The stock’s price is also affected by factors that worry analysts, such as oil prices. “Although PPC uses oil for just 14 percent of its production, analysts take it into account. They also estimate that rises in charges are not those required,” he suggests. Thanks to power production from lignite, Greece has the cheapest household electricity in the 15-member EU, he adds.
‘Great prospects’
Will the stock become more attractive if power charges go up? “PPC’s share is attractive even at 24-25 euros, far above today’s price. PPC has indeed great prospects, which we are promoting according to strict financial criteria as well as seeking the best possible returns,” Paleokrassas says confidently.
“We recently announced an investment program for 1600 MW by renovating old units using new technology combined-cycle units with natural gas or lignite. With a recent decision by the board, we are proceeding with a new scheme for the utilization of PPC’s considerable estate property,” he reveals.
The word “adaptation” is central to Paleokrassas’s thinking. He stresses that PPC must proceed with institutional and organizing adjustments to EU directives and turn to the regional market of Southeastern Europe.
He goes on to note that “PPC is seeking cooperation with power-producing companies in Europe, mainly through joint investments abroad. These joint projects guarantee the more efficient promotion of investments, broaden investment effort and create a reduction in risk.” He believes that PPC has to be transformed “from a state monopoly into a business group” and highlights the need for its staff to receive better training. Paleokrassas also proposes better public relations, with “priority to the customer” and promotion of cooperation “with local people instead of confrontation.” He concludes by describing his company as “competitive, strong, and open to business and public cooperation.”