Greece Prepares $50 Million Emergency Fund Amid Looming Energy Crisis
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Greece will release 40 million euros ($50 million) in emergency funds to avert the possibility of rolling blackouts, told a Greek court official to Reuters on Tuesday, with the country’s top electricity producer, Public Power Corp (PPC), likely to default on payments due to foreign gas exporters.
Greece will release 40 million euros ($50 million) in emergency funds to avert the possibility of rolling blackouts, told a Greek court official to Reuters on Tuesday, with the country’s top electricity producer, Public Power Corp (PPC), likely to default on payments due to foreign gas exporters.
According to a report by Bloomberg, PPC, which is 51 percent state-owned, is unlikely to be able to meet its 4.85 billion euro debt due to “extremely limited liquidity” and could face complete liquidation if 525 million euros cannot be found by June 29.
A PPC default will almost certainly put the entire nation at risk of a power cut, said Olivier Jakob, managing director of Zug, Switzerland-based energy consultant Petromatrix GmbH, and may be a major blow for both tourism and businesses.
[quote]“Greece is going to face higher costs because suppliers will want to have better creditor protection. And if the country cannot pay the bill, well, it’s a real problem,” Jakob said.[/quote]On Tuesday, government regulators met with Greece’s power market operator to discuss an emergency loan of 300 million euros to cover payments for gas imports from Russia’s OAO Gazprom, Turkey’s Botas AS and Italy’s Eni SpA.
The additional 40 million euros in emergency funds is likely come from assets that had belonged to two small electricity retailers that went out of business earlier this year, andwere frozen following a judicial investigation into their bankruptcy.
Though Greece’s power regulator RAE had repeatedly urged authorities to unblock these funds, court officials had appeared reluctant to do so.
Yet, the risk of electricity disruptions over the coming days may have forced the authorities’ hand, according to Reuters’ source, who declined to be named.
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PPC’s stock rose 3 percent after the news, outperforming a 0.4 percent drop in the Athens stock exchange index. Earlier this week, credit rating agency Standard & Poor’s cut the company’s rating to the lowest level just above default, and warned that the company was “likely to default on its obligations in the near term.”
“PPC has almost fully depleted its liquidity, owing to sharply falling earnings, climbing overdue receivables, and the absence of new credit facilities,” wrote S&P in its report.
[quote]“Greece’s energy sector could collapse… Repeated blackouts likely to ensue might discourage users from paying their electricity bills,” added the rating agency.[/quote]
