Greece faces the threat of rolling power blackouts as the economic crisis leaves utilities without cash to pay for natural-gas imports and operate power stations.
Regulators will meet with Greece’s power market operator as early as today to discuss an emergency loan of 300 million euros ($375 million) to cover payments for gas imports from Russia’s OAO Gazprom (GAZP), Turkey’s Botas AS and Italy’s Eni SpA. (ENI) The country’s largest power producer is almost out of money and likely to default after unpaid accounts jumped more than 50 percent in a year, according to Standard & Poor’s.
As Greece prepares for a second national election in six weeks, a vote that may determine whether it remains in the euro, the collapse of the energy sector has emerged as a risk for a country that imports most of its oil and gas. At the start of the main vacation season, power cuts that leave tourists trapped in dark hotels without air conditioning would be a further blow to an economy in its fifth year of recession.
“Blackout is definitely a risk,” Olivier Jakob, managing director of Zug, Switzerland-based energy consultant Petromatrix GmbH, said in a telephone interview. “Greece is going to face higher costs because suppliers will want to have better creditor protection. And if the country cannot pay the bill, well, it’s a real problem.”
Public Power Corp SA (PPC), the biggest electricity producer, is on the verge of default, Standard & Poor’s analysts Nicolas Rivier and Vittoria Ferraris said in a June 7 report. PPC, as the Athens-based company is known, has seen cash flow drop as unemployment and falling wages leave many Greeks unable to pay power bills. A lack of cash to pay operating expenses may force the closure of some power stations.