Commitments to European Commission
Sales procedures


On April 25 2018 Parliament passed a law regulating the procedure for the divestment of approximately 40% of Public Power Corporation's (PPC) lignite-fired production units and lignite exploitation rights.(1) The aim of the law is to increase competition in the Greek electricity market. Currently, over 60% of the electricity produced in Greece is generated through the combustion of locally extracted lignite, while PPC accounts for 98% of all lignite production in the country. The company enjoys an exclusive right of access to lignite, which is the cheapest source of power generation in Greece and its share in the electricity retail market is above 80%.

In 2008 the European Commission found Greece in breach of the rules of fair competition, particularly Articles 102 and 106 of the Treaty on the Functioning of the European Union.(2) Following numerous procedures, including appeals before both the General Court and the European Court of Justice, various negotiations and market tests, the Greek government proposed measures to rectify the breach and the commission accepted the proposal in January 2018.

Commitments to European Commission

In April 2004 the European Commission reached the preliminary conclusion that the exclusive rights granted by the government to PPC through two state measures (Legislative Decree 4029/1959 and Law 134/1975 for the extraction of lignite in Greece), which are long in duration and do not require a royalty payment, violate EU rules because PPC can protect its dominance of the electricity market thanks to its exclusive rights in the lignite sector. This has led to the potential for PPC to abuse its dominant position, as other prospective suppliers do not have the same access to lignite.

Subsequently, the European Commission's decision of March 5 2008 concluded that as the only party with access to lignite, PPC had a monopoly on the generation and supply of electricity in the Greek energy sector. According to this decision, PPC continued to enjoy a virtual monopoly over access to lignite and the Greek government had protected the company's dominant position in the market. The commission called on the Greek government to propose and adopt remedies to ensure sufficient access to lignite by PPC's competitors.

The decision indicated that competitors would need to have access to a minimum of 40% of exploitable lignite resources in order to create a level playing field in the market. The government initially proposed to grant exploitation rights on the lignite deposits in Drama, Elassona, Vevi and Vegora through tender procedures to entities other than PPC, which would provide competitors with access to approximately 40% of all exploitable Greek lignite deposits. The government also agreed to ensure that the companies winning the tenders would not sell the lignite extracted from these deposits to PPC. These measures were made binding by a European Commission's decision on August 4 2009, but the Greek government sought to review the decision.

On January 19 2018 the government submitted a final amended version of the proposed measures in an attempt to achieve a more efficient allocation and use of available resources to provide a more cost-efficient supply of energy. The revised measures complied with the commission's objectives of:

  • opening up the market by ensuring competition in the energy sector; and
  • meeting environmental targets by reducing carbon dioxide and industrial emissions.

On April 17 2018 the European Commission approved the amended version of the revised measures, which have now been incorporated into law.

Sales procedures

The law provides that PPC must establish two subsidiaries and transfer to them some of its lignite production units along with exploitation rights on lignite reserves, as described in the law, and other attached rights and human resources, equal to 40% of the total assets and activities of PPC. Specifically, the first new subsidiary will acquire:

  • the production unit of Meliti 1 in Florina (with nominal capacity of 330 megawatts (MW));
  • the production licence of Meliti 2 (nominal capacity of 450 MW);
  • the research and exploitation rights on the reserves of lignite in Meliti Florina and the broader area granted to PPC by Ministerial Decision 13421/1994 (OJ B'633/1994) (ie, the Klidiou, Lofon Melitis and Vevi reserves); and
  • the right to exploit PPC's reserves in the area of Klidiou as well as other necessary assets, equipment and reserves, licences and human resources.

The second subsidiary will acquire:

  • the production unit of Megalopolis 3 and 4 (nominal capacity of each unit 300 MW);
  • the total reserves for these units (including the reserves of the Lignite Centre Megalopolis);
  • their assets, equipment, licences and human resources;
  • the exploration and exploitation rights granted to PPC for the reserves in Megalopolis Arcadias by Legal Act ND4029/1959 (OJ A' 250/1959) and the respective ministerial decisions; and
  • the reserves in the real estate owned by PPC and the Greek state.

In addition, the new owner of Melitis will conclude with the Greek state a concession agreement for exploration and exploitation of lignite in the Vevi Region of Florina which has not been granted to PPC and is still owned by the state. The duration of this concession agreement should be equal to the duration of the last issued production licence for the existing lignite-fire units.

Following this divestiture of PPCs activities, by May 31 2018 PPC must launch an international tender for the sale of the shares in the two subsidiaries. The procedure will be handled by PPC in compliance with the commitments of the Greek state to the European Commission, agreed in January 2018. The initiation and completion of the tender is subject to the approval of the commission. The sale must be concluded within six months from the date on which the commission approves the initiation of the tender.

To secure fair assessment of the value of the subsidiary, PPC will, following approval from the European Commission, appoint an independent valuator who will provide a fair value range of the companies. The assessed value will remain confidential until the opening of financial offers. Should the financial offers submitted be below the assessed fair value, PPC may request the participants to increase their offers by submitting best and final offers. Before issuing a final decision regarding the acceptance of an offer, PPC may seek a fairness opinion from an independent international expert, such as an international investment bank. Such an expert should take into consideration:

  • the assessed fair value;
  • the submitted offers; and
  • all other relevant data balancing the aim of PPC to sell the companies and its obligation to protect its ownership interests.

The Greek state and PPC will, after acquiring approval from the European Commission, appoint a monitoring trustee of the European Commission who will observe competitive procedure concerning:

  • the fulfillment of commitments;
  • the financial feasibility of the projects and
  • competition.

As part of its monitoring duties, the trustee may propose that PPC undertakes additional measures in order to implement the agreement and achieve the goals.

From January 1 2019 the producers of electricity from lignite will be obliged to pay a levy for the exploitation of lignite of €1.40 per megawatt hour of electricity produced to the prefectures of West Macedonia and of Peloponnesus. The funds collected will be used in the prefectures of Arcadia, Kozani and Florina for:

  • financing infrastructure;
  • developing and protecting the environment; and
  • relocating settlements.


The PPC divestment procedures are complex and an ambitious finalisation deadline has been set for the end of 2018. There are numerous issues which must be addressed so that the competitive procedures can be completed within the prescribed deadlines. Such legal issues include those relating to the general legal framework in which these companies will continue to operate (regarding the role of lignite plants in the Greek long-term energy development plan as well as regarding their right to participate in the demand-side flexibility capacity mechanism), while other issues may arise relating to more specific problems (eg, obtaining environmental licences, the existing legal issues surrounding Vevi mines and employment issues relating to divestment).

Naturally the process has attracted significant interest in Greece although, as expected, there are concerns whether the offered capacities and exploitation rights will also attract European and international investors, and whether they would be prepared to offer a satisfactory price.

For further information on this topic please contact Mira Todorovic Symeonides at Rokas Law Firm by telephone (+30 210 361 6816) or email ([email protected]). The Rokas Law Firm website can be accessed at


(1) Law 4533 on structural measures for the access to lignite and further liberalisation of the wholesale electricity market and other provisions (OJ A'75/27.04.2018).

(2) COMP/38.700.