Gas deal, PPC debts obstacles to sub-tranche

The completion of the privatization of Greek natural gas network operator DESFA and resolving the issue of the Public Power Corporation’s debts to RES (renewable energy source) companies, are the two main obstacles the government faces in its bid to implement the prior actions required by its international creditors to release a sub-tranche of 2.8 billion in bailout funds.

Referring to a levy that will help PPC pay off its dues to RES companies, Finance Minister Euclid Tsakalotos admitted in Parliament yesterday that “we have yet to find a solution.”

The levy, a prior action demanded by Greece’s creditors, could lead to unpopular hikes in electricity bills. Tsakalotos has pledged to submit an amendment to resolve the problem ahead of the Eurogroup on October 10, where the government hopes the bailout tranche will be approved.

However, the funds will not be released, creditors have warned, unless the privatization of DESFA – another prior action – is completed.

The 2013 deal struck with Azerbaijan’s state energy company Socar involves the acquisition of a 66 percent stake in DESFA. But the sale was complicated after Greece passed a law in July raising DESFA’s gas tariffs from next year by a much lower amount than expected.

The company’s president Rovnag Abdullayev will hold talks in Athens today with PM Alexis Tsipras, and given that Socar’s letter of guarantee for the acquisition expires next Friday, both sides are expected to find common ground, as failure to do so will lead to the deal’s collapse.