Public Power Corporation (PPC), Greece’s main electricity utility, has recorded heavy losses last year and its own auditor warned about the firm’s sustainability. Experts say painful decisions may be required, including rate hikes and asset sales.
PPC recorded after tax losses of 542 million euros (607 million U.S. dollars), according to the 2018 financial results released on Tuesday.
When the assets it has conceded or is about to concede, such as four of its coal-fired plants, are added to the group data, the losses climb to 903.7 million euros. These are the biggest losses the firm has recorded in its almost seven-decade-long history.
PPC’s certified auditor, Ernst & Young (EY) even warns that the high losses and the reduced revenues generate concerns over the survival of the utility.
In the annual financial report of PPC, EY argues that “based on the estimates of the management, the conditions that are expected to continue in the next 12 months suggest the existence of substantial uncertainty that could raise significant uncertainty about the capacity of the company and the group to sustain their operation.”
PPC chief executive officer Manolis Panagiotakis on Tuesday attributed the high losses to the increased charges for carbon dioxide emissions and to the high costs from electricity auctions.
As the company is forced by the country’s creditors to divest from power production and open up the market to alternative producers and suppliers, its turnover shrank by 4.1 percent last year from 2017.
All this is set to probably lead to electricity rate hikes for consumers, in a period just before the general election this fall. Panagiotakis conceded that “PPC has exhausted all options for not rolling over the consequences to consumers.”
One of his predecessors, Themis Xanthopoulos, told Xinhua that Panagiotakis is right in referring to rate increases: “He had better do it, as the pricing policy of PPC has reached its limits.”
“No one had expected one or two decades ago that PPC would get to such a condition,” Xanthopoulos added.
“Even so it probably is not as dramatic as EY portrays it. PPC has a high credit rating, and the credit issued by Greek banks proves that,” he said.
Xanthopoulos further commented that reports about the prospects of PPC having to part with some of its most prized assets, such as its hydroelectric plants, make him particularly concerned, as “without them PPC will be finished, these are the best thing PPC has created.
PS The PPC should take into consideration that if it raises the rates, its customers could flee to private power suppliers. Just saying….