By Kakia Papadopoulou
Greece’s main electricity producer Public Power Corp or PPC as it is better known experienced one of its worst years in terms of profitability. Analysts see an over 40% fall in its 2006 net profits due to be announced late February.
Although the state-controlled electricity producer has not felt the impact of energy market deregulation since 2001, because practically there was not any, the European Union seems now more determined to impose the conditions which will enable other players to enter the energy market in Greece more easily from now on. Despite persistent calls from its administration for a more market-oriented strategy and marketing, PPC has been always used, as many other Greek public utility companies, as a strictly state-controlled company servicing the government’s needs accordingly. Heavily overstaffed, and with a stubborn tariff regime totally controlled by the state, PPC strives to face the forthcoming competition amid bad omens.
In a bullish stock market in 2006, the share managed to add 4% amid gains of over 17% of the general stock market index.
PPC’s CEO Dimitris Maniatakis asked last week, the state for a more flexible labour status within PPC. The state is the majority shareholder of PPC.
“The new more competitive environment demanded a retraining of personnel to acquire new skill, greater care of customers, greater mobility of personnel within the company, an end to temporary reassignments of PPC personnel into other state agencies and a continuous effort to reduce all those expenses that do not contribute to the creation of added value for the company.” Maniatakis said last week.
PPC’s headcount amounted to 26,500 at the end of September, 2006, the latest available data.
Analysts believe that PPC’s overall needs do not justify more than 20,000 employees.
However, Maniatakis repeated that PPC is going to hire an additional 2,035 people.
“These hirings will be on the basis of merit and totally transparent. PPC is looking for competent, specialized young people who meet its needs and can share its growth vision,” Maniatakis said.
It is obvious that Maniatakis’ hands are tied up. Amid the highest unemployment rates within the euro-zone, around 10%, and the increasing possibility of early government elections, the government wants to use its old tactics- promising jobs to voters in exchange of votes in the upcoming elections, staffing up public utilities companies with unspecialized people as pork stations.
Even calls for higher tariff increases to counterbalance any turbulent oil price movements are in vain.
“You will ask me, Isn’t there a way to tackle the increase in spending on energy? My answer is this: A few days ago, the Spanish government decided to spend Eur3.75 billion to cover the great additional costs incurred by electricity companies due to the higher increase in electricity tariffs,” Maniatakis told at the annual convention of PPC’s union GENOP on Saturday. “This amount will be paid over the next four years. In this way, Spain’s electricity firms become viable and their international competitiveness is enhanced, allowing them to seek expansion into foreign markets, even Greece,” he added.
PPC’s spending in oil and natural gas rose from EUR547 million in the first three quarters of 2004 to EUR921 million during the same period in 2006, a rise of 68% Maniatakis added.
Analysts are skeptical about PPC’s future and the once favorite stock, now seems damped by international brokerages. The underweight rating by HSBC, JP Morgan, UBS, Citigroup and others, it will be hard to change.