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The choices that led the PPC to erase | Greek Economy



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About a year ago, on May 13, 2018, "K" revealed the McKinsey PPC study, which concluded that it was an unsustainable business and estimated that it would have to improve its operating profit by 500 million. over a period of 5 years to prevent collapse. At that time, Energy Minister G. Stathakis and the PPC administration, instead of solving the problem and the consultants' suggestions, decided to excuse him and blame the "K" for participating in speculative games at the Company's expense. A year later, the financial results of the PPC show that, due to government and government administration, the situation is rapidly deteriorating and Pilar's Company gradually evolves into a nightmare of the Greek economy.

2018 was closed to PPC with a loss of 542 million euros against profits of 127.6 million euros in 2017 and a real loss amount, including the Melite and Megalopolis units on sale, to 903.7 million euros. The company's turnover decreased 201.8 million euros to 4.1% compared to 2017. At the end of the year, the short-term accounts receivable of its company and the PPC Group decreased by 949 million and 708 million. of its short-term liabilities, which led the auditor to highlight the risk of bankruptcy in the financial results report. EI states "… the existence of substantial uncertainty, which may raise significant doubts as to the ability of the company and the group to continue their business."

For CFP's viability risk, McKinsey had been advised since February 2018 to find that the Company's net debt is now 8 to 9 times greater than its operating revenue (at the beginning of 2018). For the company to be viable, that relationship should be limited to 3, McKinsey noted in the business plans that he delivered to the PPC administration and relevant finance and energy ministries and proposed actions to improve operating profitability from 90 to 100 million. per year over the five years 2018-2022. The famous "compass project" that Mr. Panagiotakis never presented to the members of the Board of Directors. on the ground, when asked to approve it, which was not translated (!) provided for a reduction of staff of 6,000 in 5 years, corresponding to 50% of PPC staff and readjustment of tariffs.

McKinsey's plan remained in the drawer, and today it is powerless to ensure the company's viability, as operating profitability has shrunk by 45% over 2017, making it more difficult to correlate the company's net debt by 2018. 4 million euros . In addition, the critical assumptions adopted by McKinsey, such as the price of CO2, have changed radically.

The transformation of the PPC from a healthy business and a pillar of the country's electricity system into a troublesome undertaking and a systemic risk to the economy due to its size and position in the electricity market is a consequence of timeless political choices that have never allowed PPC to move away. in it the characteristics of the monopoly, although it is forced to operate in one, albeit with many distortions, a competitive environment for obvious reasons of practicing a policy of small parties. PPC absorbed all costs arising from the transitional model of opening the electricity market, which in 2012 brought the same

Businesses and the entire electricity market are first on the verge of bankruptcy. The great opportunity to restructure the PPC and rehabilitate the electricity market as a whole was lost in 2015 when the SYRIZA government abandoned the "Small PPC Project" and suggested to the institutions the sale of lignite units as well as the auction of lignite (NOMME), with binding targets, which, if not achieved, will follow alternative structural measures.

Policy decisions costing 1 billion euros

Three years after the implementation of this disastrous plan, PPC, according to the company itself, was debited in 1 billion euros and faces the possibility of ending the barren and the second bidding for the sale of the Meliti and Megalopolis units, which will have consequences .

In the follow-up report on the financial results for 2018, it can be seen that "there can be no guarantee that the parent will not be obliged to continue with additional lignite (or other) production loses in the future in order to fulfill its obligation to reduce market share in the electricity generation and supply markets. "

The "Small PPC" project responded to the country's obligation to remove the PPC monopoly in lignite and open the retail market and at the same time created the basis for a comprehensive restructuring of the Company with the expected revenue of 1.5 billion EUR Today, the PPC is exactly the same as your obligations to the EU. and institutions, but in a much worse financial situation, with the risk that, if there is no immediate reversal, the economy will be catapulted into the disaster. During this period, CFP lost substantial ground for its expansion in the RES sector, leaving the field free for its domestic competitors and for the large foreign companies that entered the market aggressively.

At the same time, invading the state, it was forced to implement horizontal electricity policies for debts of up to € 1,000, resulting in total corporate and domestic debts projected to more than € 2.7 billion, accounting for almost half. their turnover.

The situation regarding the company's liquidity has deteriorated since mid-2017, with the upward trend in CO2 costs (from € 5 / tonne at the beginning of 2017 to € 23 / tonne at the end of the year and € 27 / tonne today) , as the government, given the political cost, did not allow the passage of part of it to consumption. Licensed funds and the lack of access to international markets for financing from 2017 onwards, PPC stands out with virtually liquid injections and prepaid vs. rebate revenue. The liquidity problem was transferred to the entire electricity market with a total liabilities of the PPP of more than € 500 million. There is also a large exposure to the PPC of the Greek banks. Of the total € 3.7 billion in PPP, they financed about € 1.7 billion.

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