Greece: Power grid operator IPTO privatization or unbundling forced by lenders

Published on 19. August 2015., SEE Energy News

A Greek government proposal to lenders for the future of IPTO, the power grid operator, entails breaking up the operator and keeping its fixed assets under the control of main power utility PPC, the parent company.

Through this move, all of IPTO’s fixed assets, such as electricity networks, lines, sub-stations, as well as development of new projects and maintenance of exisiting infrastructure, would remain fully controlled by PPC.

Based on the proposal, the operator would gain full independence from PPC, both in terms of ownership and its operations. It will be responsible for managing the grid and electricity market, interconnection licence applications, as well as planning.

The proposal would transform IPTO, locally acronymed ADMIE, from an ITO (Independent Transmission Operator) to an ISO (Independent System Operator), resembling the operator’s precursor, DESMIE.

According to EU law, electricity operators may operate based on one of three models – ISO, ITO, and OU (Ownership Unbundling). In 2012, Greece’s operator had switched from ISO to ITO status.

Equity shares of the new company will be able to be acquired by institutions such as investment funds and banks, but not energy companies.

The Production Reconstruction, Environment and Energy Ministry believes the proposal for IPTO will meet lender demands, who have called for IPTO to be split from its parent company and privatized, as part of the latest bailout agreement for Greece. However, avoiding IPTO’s privatization would be accepted by lenders as long as a convincing alternative plan promising equal results, meaning real competition in the electricity market, can be found and implemented.

The Greek proposal does not require the state to possess capital, while it also satisfies limits set by Production Reconstruction, Environment and Energy Minister Panos Skourletis. Just days ago, the minister declared: “You can’t privatize fixed assets of priceless value.”

The proposal also appeases the concerns of PPC officials who fear the utility would collapse if it fully surrenders its fixed assets, currently controlled by subsidiary firm IPTO.

It remains unknown whether the country’s lenders will accept this proposal, which was submitted by Greek officials several days ago. Lenders have yet to respond.