annual report 2004

A NNUAL R EPORT 2004PUBLIC POWER CORPORATION S.A.Notes to the consolidated financial statementsDecember 31, 2004(All amounts in thousands of Euro)Liquid fuel is stated at the lower of cost and net realisable value. Thecost of liquid fuel reflects purchase price plus any taxes (other thanVAT), levies and other costs necessary to bring it to its present locationand condition and is determined using the weighted average methodfor the period. Liquid fuel costs are expensed as consumed and areseparately reflected in the accompanying statements of income.(v) Natural Gas: Natural gas is purchased from a State owned company,Public Natural Gas Supply S.A. ("DEPA") under a contract expiring in2016. Prices are mainly dependent on the current market prices ofheavy oil, gas oil and certain types of crude oil. To a lesser extent theydepend on national and international financial indices. Payments aremade in local currency. The above contract is not accounted for as aderivative as it is a normal executory contract intended to be settled bythe Group by taking delivery in the normal course of business, and forwhich the Group does not intend to settle net. Natural gas fuel isexpensed as purchased and consumed, as the Group does not own anystorage facilities. Consumption of natural gas is separately reflected inthe accompanying statements of income.(w) Electricity: Electricity is periodically purchased under short-termcontracts. Electricity costs are expensed as purchased and separatelyreflected in the accompanying statements of income. Such contracts arenot accounted for as derivatives as they are normal executory contractsintended to be settled by the Group by taking delivery in the normalcourse of business, and for which the Group does not intend to settlenet. However, purchases of electricity denominated in U.S. dollars are( 102 ) C HAPTER 6A PPENDICES