Greece's union of electricity workers has vowed to block a reported deal between dominant electricity company Public Power Corp. SA and Germany's RWE AG for the renewal of thousands of megawatts of capacity.
"As regards reports in the daily press about a memorandum of understanding between PPC and the German company RWE, the (union) declares that it will not permit such a decision," the powerful General Federation of Electric Power Workers, or Genop, said in a statement late Thursday.
According to press reports, PPC has signed a preliminary MOU with RWE to explore cooperation in new projects such as joint development of new thermal units in Greece, renewable energy sources, joint expansion in the Balkans and joint natural gas pipeline projects.
According to the reports, if a final deal is reached, RWE will own 51% and hold management control of the new units, while PPC will retain the remaining 49%.
The union sees the deal as being a backdoor route towards the further privatization of the PPC - now 51%-controlled by the Greek government - something it opposes.
A PPC official confirmed the existence of the MOU, but stressed it hasn't yet been signed.
"The MOU has not been signed between RWE and PPC and discussions are at a preliminary stage," the official said.
RWE Friday confirmed it was in talks with PPC on possibilities for cooperation but said no MOU has been signed yet be the two sides.
In a research note, HSBC Pantelakis Securities said that PPC has huge financing needs as part of its plans to renew its production capacity.
"Note that there have been similar rumors in the past, given huge projected PPC capex needs - about EUR4 billion for thermal capacity recycling and EUR2 billion for renewables," the note said. "PPC has also disclosed in the past that it has received some approaches from foreign utilities for joint projects."
"We understand though that such a plan will face strong opposition by PPC's powerful union - already pledged to avert it - and could have legal implications since it could be effectively seen as a behind-the-scenes further privatization of 51% state-controlled PPC," the note added.
The union statement comes amid tensions between PPC management and the union. On Thursday, unionists occupied the offices of Chief Executive Officer Takis Athanasopoulos demanding changes to the company's investment plans - the second recent run-in between the union and the management over future plans for the company.
Earlier this month, Genop canceled a planned 24-hour strike after PPC management bowed to union pressure regarding a reorganizational structure of the company and agreed to a six-month dialogue with Genop about its plans.
At issue is a proposed reorganization of the company into six wholly-owned business subsidiaries, which is expected to be voted on at a PPC board meeting Nov. 13 and will be announced Nov. 21, the same day PPC presents its nine-month results. The union opposes the proposed creation of six wholly owned subsidiaries, regarding this too as a step towards further privatization of the company. Under the deal reached with Genop, the company will not go forward with the reorganization until after the six-months of consultation. On Thursday, the protest inside the CEO's offices led to a similar accord being hammered out between management and the union.
Under a EUR5 billion investment plan, PPC intends to replace its aging power plants - some more than four decades in operation - with new, more efficient units. The plan calls for the replacement of 3,200 megawatts of installed capacity, something which the union supports However, the union has been pressing the company not to limit the replacement of old plants to just 3,200 MW, but to consider further investments that would help prepare the company for competition in Greece's newly-liberalized electricity market. Under an agreement Thursday, the management acceded to the union's demands and said it will consider further power plant construction, prompting Genop to call off further industrial action which it had previously threatened.
"After freezing plans by the board of directors to dismember the company and the latest developments...the board of directors of Genop decided in an extraordinary meeting to put off the rolling 48 hours strikes," the Genop statement said.
In early trade, PPC shares were down 0.8% at EUR26.22 in a broadly higher market.