Gov’t – SOCAR show common will to complete the acquisition of DESFA

Gov’t – SOCAR show common will to complete the acquisition of DESFA

Athens, September 28, 2016/Independent Balkan News Agency

By Spiros Sideris

In a positive atmosphere took place the meeting of Prime Minister Alexis Tsipras with the administration of state energy company of Azerbaijan Socar.

Although white smoke did not come out in the end, it paved the way for seeking a solution to the notorious acquisition deal of DESFA by SOCAR, during the meeting of Prime Minister Alexis Tsipras the head of the Azerbaijani company Rovnag Abdullayev.

According to the government statement at the meeting, all the details and technical issues relating to the completion of the tender for DESFA were discussed. In this context, Socar announced the extension for another month of the letter of guarantee which has filed and ended on 30 September.

This basically means that given a one month extension is given to seeking a solution that would satisfy both sides and “rescue” the tender, as indeed urge (if not demand) the institutions in their negotiations with the Greek government. The Greek side also carries the urge of the American side to complete the tender.

During one month, as agreed by the two sides, there will be contacts among all involved, in order for a solution to reached, that would be beneficial for all parties.

Already, The Minister of Productive Reconstruction, Environment and Energy  Panos Skourletis, responding to the pressure of lenders, has tabled an amendment which paves the way to partly satisfy the Azeri, but without withdrawing the basic regulation that created the current engagement, namely the legislative reduction of the regulated asset base of DESFA.

Specifically, the wording of the bill in question states that “the recoverable difference DESFA for the years 2006-2015 is allocated from 2017 onwards by RAE with the revision of DESFA pricing regulation”. The change, compared to the previous provision which had been passed just in July 2016, relates to the allocation of the recoverable difference as the repealed regulation of Law 4409/16, provided that it is “equally distributed in each year of the next 40 years starting from 2017 with a bonus based on the amount of current inflation. “The new provision gives RAE the right to decide indefinitely how the increment will be distributed after the year 2017.

It is estimated that the decision to be issued by RAE will be the result of the ensuing agreement between institutions – government – Azeri, in order to advance the privatization under the existing tender.

In other words, it is probable that the decision of RAE will be such that will cover, even partially, the requirements of the Azeris, with scenarios for the further increase in network usage invoice that has been suggested by DESFA (from 23.2% to the levels of 30-35%), while also on the table is the idea to reduce the duration of the recoverable difference of previous years from 40 years to 30.

The case of the sale of DESFA to SOCAR is pending from June 2013 and passed the most difficult phase when the government proceeded with the amendment leading to a reduction of some revenue that DESFA is expected to receive; an amendment to which the investors of SOCAR reacted strongly.