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30/09/2016

Athens opposes EU energy strategy, blocks privatisations

Energy

Athens opposes EU energy strategy, blocks privatisations

Panagiotis Lafazanis

[Wikimedia]

The Syriza-led government will be against an Energy Union that undermines Greece’s national interests, including in its relations with Russia, said Greek energy minister Panagiotis Lafazanis, who also ruled out any privatisation schemes for the country’s energy sector.

Lafazanis, who belongs to the leftist wing of the Syriza party, said that Athens is not willing to follow EU’s energy strategy as it currently stands.

He made the comments at the Athens Energy Forum 2015 conference last week (11-12 March), ahead of a scheduled meeting of Greek PM Alexis Tsipras and Russian President Vladimir Putin on 8 April, in Moscow,

“We generally don’t question the declared objectives of Energy Union, but we do doubt whether the means being proposed can succeed or, on the contrary, will end up reinforcing the inequalities and painful economic and social complications currently prevailing in the eurozone and the EU,” Lafazanis said.

One of the key elements of the Energy Union is that member states’ energy deals with non-EU nations should be scrutinised by the European Commission before they are signed. Russia has always insisted that those deals are confidential.

It is also envisaged that the EU will diversify its energy sources through the Southern Gas Corridor, in an effort to decrease its energy dependence on Moscow.

Echoing Hungarian leader Viktor Orbán, the Greek minister made clear that such a provision undermines the national sovereignty of the country and rules out any kind of “flexibility” toward the implementation of energy policies in accordance with national interests. 

>> Read: Orbán says EU’s Energy Union is a threat to Hungary

“Greece will not become a dependent pawn of unilateral energy choices or axes, in the name of the alleged diversity of EU’s energy supplies,” Lafazanis emphasised last week in a speech in Athens Energy Forum.

Greece was among the EU member states that had signed an intergovernmental agreement with Gazprom on South Stream, a project finally scrapped by Moscow. The southern branch of the pipeline, which was to have had Greece as a possible endpoint, had already been abandoned prior to the pipeline’s cancellation.

>> Read: Russia says South Stream project is over

The previous coalition government had aligned with Commission’s decision to review all energy-related intergovernmental agreements, in order to verify their compatibility with EU law.

Privatisations and energy market

In the meantime, Greek authorities have announced that the privatization process of the Greek energy market, a commitment also made by the previous government towards international lenders, and a crucial term of the bailout, will stop.

The previous coalition, center-right New Democracy and the Socialist Pasok, had committed themselves to privatising the energy sector. However, the Syriza-led government will keep it under state control.

Natural gas importer and distributor (DEPA), and electricity company Public Power Corporation S.A. (PPC) are both controlled by the Greek government.

Proposals for the privatisation of DEPA and PPC have been “abandoned”, according to Lafazanis.

DEPA had also been a political “headache” for the previous government, which was willing to privatise it.

But ahead of the tender, only Russia’s Gazprom expressed interest before backing down, reportedly after being warned that the deal would be blocked by the Commission.

Regarding Greece’s gas transmission operator (DESFA), a 66% stake was acquired by Azerbaijan’s state-owned oil and gas producer SOCAR, with the remaining 34% remaining in the hands of the Greek government.

DESFA’s privatisation helped the Trans-Adriatic Pipeline (TAP), which is part of the Southern Gas Corridor, to win its bid for Azeri gas over its competitor, Nabucco. 

But the deal is currently being scrutinized by the European Commission to see if it is compatible with EU law, and Azerbaijan has expressed its concern over the delay.

>> Read: Aliyev: Azerbaijan concerned by Commission’s DESFA investigation

Azeri SOCAR has already granted an advance payment guarantee that expires in June 2015. According to the terms of the tender in 2013, a “safe exit” from the deal is only possible for SOCAR after June 2015, on the condition that the sale is not completed.

Athens is waiting for the Commission’s investigation to make its final decision on DESFA’s privatisation, according to Lafazanis, who avoided elaborating on the issue.

The Greek government has expressed its support for the TAP project, but finds it “fair and reasonable” to seek offsets from its passage from Greece. Sources told EurActiv that this particular intergovernmental agreement includes such a provision.

A turn to Moscow?

Lafazanis also hinted that Athens has its eyes open for cooperation with other non-EU countries.

After he clarified that Greece was not an energy “satellite” of any big power, he said that it was pursuing “multidimensional energy relations with all the countries of our region and in Europe”, specifying the “wider geographical definition of the latter”.

The pro-Russia stance does not come as a surprise.

The first clash of the Greek coalition government with the EU was over Russia, opposing tougher sanctions against Moscow for its role in the Ukraine crisis.

>> Read: Tsipras has first clash with EU – over Russia

But Syriza’s intentions were made pretty clear before the national elections in Greece. Syriza MEPs had initially opposed the signing of the EU-Ukraine Association Agreement, which irked Moscow, and abstained from backing a similar deal between the EU and Moldova.

“Having another solution on the table, I think, is helpful,” Greek Defence Minister Panos Kammenos said this week, adding that rumors about Greece’s close relations with Russia “have a basis”.

In a recent interview with EurActiv Greece though, leading Syriza MEP Dimitris Papadimoulis, had stated that Syriza government would never “leave Europe for the cute eyes of Mr Putin”.

US warns against monopoly regime

Speaking at the same conference, former US Ambassador Matthew Bryza, now Director of the International Centre for Defence Studies, warned Greece against turning its domestic gas market back to a monopoly regime at the expense of Greek consumers.

“I heard the Minister of Energy emphasise the need for a multidirectional energy policy and the major powers not to exploit small ones. We have no objection. If these are the goals of Greece, the worst thing to do is to step back in(to) the Southern Gas Corridor and return to the monopoly that led Greece to pay for natural gas more expensive than anywhere else in Europe.”

Indeed, according to Eurostat, Greek consumers pay 35% more for natural gas than the rest of the EU.

Greece imports 65% of its annual gas needs from Russia, and despite a deal for a gas price reduction by 15% last year between DEPA and Gazprom, debt-ridden Greeks keep on paying the highest bill in Europe.

According to analysts, the monopoly regime of DEPA, controlling 90% of the wholesale and 51% of the retail market, has helped it dominate he market and make excessive profits.

According to Kathimerini, for the last three years, DEPA has ensured excessive profits despite a significant decline in demand (€146.7 million in 2013, €106.3 million in 2012 and €190.2 million in 2011).

Background

Greece secured a four-month extension of its financial rescue on 24 February, when its eurozone partners approved an economic reform plan that backed down on key measures and promised that spending to alleviate social distress would not derail its budget.

>> Read: Eurozone approves Greek reform plan with reservations

Germany's rejection of an initial Greek request for a six-month loan extension forced Athens into a string of politically sensitive concessions, postponing or backing away from campaign promises to reverse austerity, scrap the bailout and end cooperation with the "troika" of EU, ECB and IMF inspectors.

>> Read: Greece, eurozone agree to four-month loan extension, avert crunch

Further Reading