June 13 (Reuters) – Greece’s top electricity producer Public Power Corp. (PPC) (DEHr.AT) will face high costs from 2013 because of its climate-warming carbon dioxide emissions, its chief executive said on Sunday.
“PPC is a profitable company … but at the same time one which pollutes because of its use of lignite, this will cost it dearly soon,” the state-controlled utility’s CEO Arthouros Zervos told Sunday’s Kathimerini newspaper in an interview.
“From 2013 PPC will need to pay about 800 million euros ($968 million) annually to buy CO2 emission rights under the framework of EU policies to limit climate change,” he said.
Western European countries have given strong backing to deeper cuts to climate-warming emissions as the EU plans to cut CO2 by 20 percent over the next decade. [ID:nLDE65A1Z4]
Zervos said lignite use by PPC is not about to end but its role as a fuel in its power generation plants will come down in the years ahead.
“My personal bet is to transition gradually to renewable sources,” he said.
The CEO also told the paper that without raising electricity prices, PPC is bound to face serious problems.
“Based on our projections, in 2012 we will have profit of 400 to 500 million euros. But in 2013 we will have losses of 400 to 500 million. There is no alternative, either tarriffs will be raised or PPC will go bust,” Zervos told the paper.
PPC, which controls more than 95 percent of Greece’s retail electricity market, has said iupstart rivals are likely to start eating into its market share.
New energy providers and traders, such as the Greek unit of Austrian utility Verbund (VERB.VI), can cherry-pick PPC’s clients by undercutting the company’s regulated electricity prices.
“Right now we have 32 different rates, conmmercial ones which generate a significant profit odf around 20 percent, and low residential rates which are below cost,” Zervos said, adding that after the matket’s deregulation competitors can target commercial clients with discounts.
Greece, which aims to raise 3 billion euros through privatisations in the next three years to pay down public debt, is not planning to divest its 51 percent stake in PPC. [ID:nLDE6221IR]
“My opinion, not the government’s, is that in the current conditions, the 51 percent holding must be kept by the state because PPC’s share is very under-rated and proceeds from a sale would be low,” Zervos told the paper. (Reporting by George Georgiopoulos; Editing by Louise Heavens)