By Kakia Papadopoulou
Greece’s leading refiner Hellenic Petroleum and Italy’s second-largest power producer Edison announced last week that they have signed an agreement to set up a joint venture in Greece.
Hellenic Petroleum’s subsidiary T-Power will be the vehicle for the joint venture and Edison agreed to pay 55 million euros in cash and to undertake 50% of the subsidiary’s debt which is around 220 million euros. Also Edison will contribute a total of 1200 megawatts of planned assets, namely the planned units in Thisvi and in Astakos which have been granted 600 MW and 420 MW licenses accordingly.
The deal received lukewarm reaction from analysts as the rationale of the move was a “little ambiguous”, according to industry observers.
Edison’s appetite to enter the Greek market is known, after its consecutive efforts to reach a deal with Public Power Corp which proved fruitless.
Additionally, the Poseidon natural gas pipeline, the underwater section between Greece and Italy, built by Greece’s Public Gas Company or DEPA and Edison is another move in line with the Italian’s company strategy to enter the underdeveloped local market.
On the other hand, Hellenic Petroleum’s target to gain a strong foothold in the newly-deregulated energy market is known, and the establishment of T-Power with current capacity of 390 MW was in line with the refiner’s strategy.
“Having only one production unit is like having none,” a top-ranking official of T-Power told energia.gr. But he added that “ the market is still immature and our alliance with Edison should be seen through a longer lens.”
The natural gas angle is seen as a possible boost in the Hellenic Petroleum-Edison agreement, given that the refiner’s capital position is strong and there has been no need for cash infusion.
“This deal doesn’t make sense from the money point of view,” an energy consultant said. “Hellenic Petroleum does not need Edison’s money to promote its position in the energy field,” he added.
The T-Power as an investment has generated a healthy yield so far considering that the company started with assets of 189 million euros and the current value of its assets are estimated at 350 million euros.
Besides, the positioning of foreign players through alliances with local players in the energy sector is taking more the shape of a trend in Greece nowadays.
Copelouzos Group has joined forces with Italy’s Enel while Mytilineos has formed a joint venture with Spanish Endesa.
Despite the rigidities of the energy market in Greece some things are clear: there is a considerable energy deficit in the country after the closure of the Kozlodui nuclear plant in Bulgaria- the cheap electricity exporter of the region. The burden for Public Power Corp, the state-controlled electricity producer- to cover the power deficit is heavy, considering its poor financial position. Additionally, the low electricity tariffs which are in effect in Greece imposed by the state, worsens further its position and this regime will be abandoned soon, otherwise PPC will go bankrupt eventually.
It is obvious that energy players are building positions in this transitional phase of Greece’s energy landscape. The question which remains is how smoothly and speedy this transition will be with all this state involvement in the energy sector.