Greece Scrambles for Bank Loans to Avert Energy Meltdown: Sources
Greek energy companies are seeking emergency bank loans to pay suppliers and avert widespread power and gas cuts during the vital tourist season, industry sources told Reuters on Friday.
A vicious cycle of shrinking power demand, bad debts and flawed regulation has created a EUR350 million hole in the finances of Greece’s energy system, which depends heavily on imported electricity and gas.
The looming energy crisis is compounding the country’s debt problems before a general election on June 17 that may decide its future in the eurozone. It also threatens to cause blackouts during the power-hungry summer holiday season, one of the few foreign exchange earners for the uncompetitive Greek economy.
Faced with disruptions, Greek power authorities and energy companies are about to seek the emergency bank loans until more permanent measures are taken later to fix structural flaws in the creaking system.
State-owned gas provider DEPA is talking to domestic banks to secure the cash it needs to pay for about EUR120 million of imports later this month, a company official said on Friday.
Greece imports all its natural gas from abroad. About 80 per cent comes via pipeline from Russia. According to industry sources, DEPA faces a June 22 deadline to settle obligations to Russian gas giant Gazprom.
The loan that is being arranged with a string of Greek private and public-sector banks would help to keep the gas flowing for several weeks, a DEPA official told Reuters.
“DEPA is in negotiations with a consortium of Greek banks for a loan that will allow it to service its obligations for at least a month, until early July,” said the official, who asked not to be named.
Energy regulator RAE said on June 1 it would call an emergency meeting with industry players this week to resolve the impasse. The talks will probably be postponed until next week after a DEPA board meeting scheduled for Monday, a RAE official told Reuters.
At the heart of the energy system’s cash crunch is a EUR350-million hole in the accounts of power grid operator LAGHE, out of which the privately-run utilities are reimbursed.
LAGHE has run up the deficit because its revenues have not matched the big subsidies it pays to renewable energy producers, as part of Greece’s efforts to become Europe’s solar powerhouse.
The deficit has deteriorated in recent months due to Greece’s debt crisis. Two private electricity retailers went bankrupt without honouring their obligations to LAGHE. Unpaid electricity invoices have also soared after many consumers refused to pay an unpopular property tax charged on the bills of state-run electricity company PPC.
LAGHE has now taken preliminary steps to apply for an emergency loan from the Loans and Consignment Fund, a small public sector lender. “LAGHE has sought information on how the loan would work but it has not yet made a formal application,” an official involved in the talks told Reuters. “The Loan and Consignments Fund is inclined to give the loan, if it receives an official request,” the official added.