By Kakia Papadopoulou
The Greek government is mulling privatization plans for Public Power Corp while at the same time it examines radical amendments of its institutional framework on the energy market deregulation.
Privatization along with tariff system deregulation and a competitive environment seems the only way to drag PPC out of the last three year crisis.
The most likely scenario which can be easily implemented and has the approval of the Economics and Finance Minister George Alogoskoufis is the sale of a 30% stake of the supply sector of the company. The primary discussions on this plan involve the greater Athens and Thessaloniki areas where the profit margin is attractive. By giving up the 30% stake of the supply sector, PPC gets rid of its commitments which are dictated by the current institutional framework as it keeps the 70% stake of the retail electricity market.
The present operational framework of PPC imposes controlled tariffs regardless of the production or the purchasing cost by PPC itself. Also PPC will get rid of the Public Service Obligations which reach EUR400 million annually and the non-operational investment like the hydroelectrics which amount to some hundreds million euros.
PPC’s management seems ready to propose the above-mentioned plan which will enhance competition and it will rationalize its costs. A development like this will enable PPC to shut down some expensive units which uses today to cover excessive demand and to claim a new regulatory plan for the electricity pricing of the producers.
There are also proposals for the abolition of the common tariff regime which burdens asymmetrically the consumers of the different parts of the country.
An automated tariff system which will be based on fuel prices and gas emissions involving the electricity rates by all producers is also examined.
The proposals are still in a preparatory stage and they emerged after PPC’s operational unbundling.
The unbundling of PPC’s activities for 2006 which has been just completed revealed sharp losses by the trade sector, confirming the distortions of the daily wholesale market and the loopholes in Crete’s case and the non-connected islands.
The supply sector registered total losses of EUR1 billion in 2006. In electricity daily pool , PPC sells energy as producer and importer and at the same time buys as a supplier at the marginal price to sell it to the consumers at a retail price set by the state. The marginal price throughout 2006 and until April 2007, when the marginal price was amended, was set at a much higher level on a monthly basis burdening the company’s financials. Also, the amendment threw away the electricity wholesalers, indicating the impasse of the semi-deregulated market.