By Chryssa Liaggou
The new institutional framework for the natural gas market is likely to have serious side effects for Greece’s two largest energy companies, Hellenic Petroleum (HELPE) and the Public Power Corporation (PPC). These are linked to the framework’s weakness in coupling the political choices of past years — which were not based on any long-term energy plan — with the new requirements posed by market deregulation for listed energy groups.
The framework provides for the breaking up of the Public Gas Corporation (DEPA) into two companies: the parent holding company that will conduct commercial operations, and a 100 percent-owned subsidiary which will manage the gas transmission system. It is stipulated that this subsidiary must remain under public control for at least 10 years, irrespective of the shareholder composition of the parent company.
It is this arrangement that is responsible for the likely side effects on HELPE and PPC. The former already owns 35 percent of still single DEPA, and the latter has an option for a 30 percent stake which it is currently in the process of exercising.
Both groups had received these “endowments” when they were still under full state control and were being prepared for stock market listing rather than as any result of long-term energy planning. The breaking up of DEPA and the state’s retaining control of its profitable gas transmission segment has led HELPE and PPC to raise serious issues concerning the protection of their interests. The two groups argue that their investment strategy has been affected by the endowments — because when they received them there was no suggestion of a breakup — and that as a result they should be entitled to compensation.
DEPA was founded in September 1998 as a subsidiary of the Public Petroleum Corporation (DEP). The need for the restructuring and listing of DEP on the bourse that year, which also led to its being renamed as Hellenic Petroleum, dictated separating DEPA from the group, as it still had negative value. Therefore, 85 percent of DEPA was transferred to the government, with the remaining 15 percent remaining with HELPE. The same law granted HELPE the option of raising its stake in DEPA in the future and which it exercised in July 1999.
PPC was also given a 30 percent option in DEPA. It now argues that DEPA’s division according to the new framework reduces the value of its stake and its own listed share. PPC also argues that the new arrangements will have a direct adverse effect on its revenues, as it will be deprived of participation in the profits of the gas transmission company. The corporation claims that it owns this right and should be compensated accordingly.
(Kathimerini)