Public Power Corporation (PPC): what are the next steps?

Is it possible to reduce drastically the market shares of the incumbent operator, without negatively affecting its value? This is not an easy balance to strike. PPC was supposed to have important advantages against its competitors such as the monopoly of the lignite-fired power plants. 

However, the recent failure of the tender, conducted suite to the judgments of the EU Courts, for the divestment of the units of Meliti and Megalopoli, demonstrated that the market does not necessarily consider lignite-fired plants as a profitable business. Lignite-fired plants grow old and are not anymore compatible with the target of drastically reducing the Co2 emissions in view of environmental considerations. On the other hand PPC has significant burdens, such as universal service and public service obligations. More generally, PPC is obliged by public authorities either de jure or de facto to follow a social policy in terms of applicable tariffs. In the recent years, PPC was also obliged via the so-called NOME auctions to sell to its competitors below the marginal price of the system.

The government intends to implement a plan of action with four axes in order to ameliorate the financial situation of PPC: suppression of the NOME auctions, gradual repayment of the PSO fees owed to PPC, divestment of the distribution network and reorientation of the energy portfolio of PPC to RES. To our view, it should also be examined whether and to which extent it is possible to tender parts of the public service obligations of PPC to other producers as it is the case in many countries. Thus, the respective load would be shared proportionally by all the participants of the market.