Greece's 51% state-owned electricity utility Public Power Corp. SA (PPC.AT) won't increase tariffs this year, due to the economic downturn and lower oil prices, Development Minister Costis Hatzidakis said Tuesday.
According to media reports, PPC is likely to set a net profit target of between EUR200 million and EUR500 million for 2009, based on different assumptions of the average oil price.
In an effort to bring PPC's prices in line with its operating costs the Greek government approved in November 2007 a series of staggered tariff increases as part of a ministerial decision.
It also allowed PPC to have an automated tariff adjustment mechanism from Jan. 1, 2009, whereby tariffs would be pegged to fuel prices.
However, at the end of December last year, the government decided to delay the implementation of this decision throughout 2009, citing the global economic crisis.
According to reports in the Greek press, PPC won't be compensated for its public service obligations this year. Local brokerage Proton said Tuesday that the cancellation of PPC's reimbursement "will constitute a negative development, if confirmed."
Greece enjoys some of the lowest electricity tariffs in Europe and the prices PPC can charge consumers are tightly controlled by the government.
Apart from low overall tariffs, PPC subsidizes farmers, island dwellers and those with large families, as well as company employees and pensioners. The inhabitants of the islands not connected to the mainland electricity transmission system, for example, pay the same tariffs as the rest of Greece, despite a much higher cost of supply.