The election of Arthouros Zervos as head of Greece's dominant utility, Public Power Corporation SA (PPC.AT), may signal a new era of consensus at the company after two years of stormy--and sometimes violent--confrontation between management and the unions.
The election of Arthouros Zervos as head of Greece 's dominant utility, Public Power Corporation SA (PPC.AT), may signal a new era of consensus at the company after two years of stormy--and sometimes violent--confrontation between management and the unions.

On Tuesday, the PPC board of directors formally elected Zervos, a 57-year-old academic by training and president of the European Renewable Energy Council, as chairman and chief executive officer of 51%-state-owned PPC, replacing outgoing Chairman and CEO Takis Athanassopoulos.

But even before taking on the post, Zervos--along with the newly-elected Socialist government that nominated him--has moved to mollify PPC's powerful labor union, Genop-PPC, which clashed repeatedly with his predecessor and stymied efforts to restructure the company.

Specifically, Zervos and the government have said they will push ahead with two long-delayed investments in lignite-fired power plants and will seek to restructure, and likely increase, power tariffs to pay for increased CO2 emission costs in the future--both key issues for Genop.

In a statement by the union last week, Genop highlighted the "good climate" between itself and the new management, prompting analysts to flag the emerging consensus at the company.

"[There have been] recent statements by PPC's union on new lignite investments [and] the need to restructure tariffs so as to incorporate the CO2 burden," notes Eurobank Securities. "These were along the same lines with Mr. Zervos' statements and relevant comments from the ministry of energy, confirming the existence of a consensus on crucial matters for PPC."

The new Socialist government is seen as much more closely allied with the unions than the previous center-right New Democracy government, which Genop saw as planning to break up and privatize the state-owned utility.

At the board of directors meeting Tuesday, the government also appointed Ioannis Tsarouchos, a longtime labor leader, as one of the government's official representatives to the board. Combined with the two seats currently reserved for Genop, the appointment means that the union will effectively have three votes on the 11-member board.

These moves mark a big change from the past two years, when Genop regularly disrupted board meetings, staged rolling strikes and effectively sabotaged efforts by Athanassopoulos to form a new joint venture with Germany 's RWE AG (RWE.XE).

"There is a consensus emerging at PPC between management, government and the unions," said an analyst at one of Greece 's leading brokerages. "And the smart thing to do is for the management to find some level of cooperation; otherwise we will see a return to the old scenario of continuous conflict."

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