European CommissionThe Second Economic Adjustm<strong>en</strong>t Programme for Greece. Fourth Review3. A further developm<strong>en</strong>t is repres<strong>en</strong>ted by the rec<strong>en</strong>t difficulties of several <strong>en</strong>ergy-int<strong>en</strong>sive companies, which have reportedto be close to shutting down because of the high <strong>en</strong>ergy costs. The reaction of the Governm<strong>en</strong>t was a direct interv<strong>en</strong>tion inPPC's g<strong>en</strong>eral assembly to propose and approve a significant discount to electricity prices for <strong>en</strong>ergy int<strong>en</strong>sive companies.While this solution provides an obvious immediate relief for companies, it is clear that it creates further problems on othersides. In ess<strong>en</strong>ce, it does not tackle the distortions but rather comp<strong>en</strong>sates them, at the exp<strong>en</strong>se of PPC's profits.Against this background, and taking account of discussions during the review missions, the governm<strong>en</strong>t has decided to adopta package of reforms, including ambitious actions on both the gas and electricity markets.In the gas market:The Governm<strong>en</strong>t has committed to a package that would change the landscape of the gas market, allowing Greece to reap theb<strong>en</strong>efits of an increased and more diversified gas supply and of the rec<strong>en</strong>t r<strong>en</strong>egotiations of existing supply contracts withRussia. The positive effects (some already in the short term) on the competitiv<strong>en</strong>ess of the manufacturing (especially <strong>en</strong>ergyint<strong>en</strong>sive)sector, and on the welfare of households, are expected to have a measurable impact on growth, possiblysignificantly larger than the one forese<strong>en</strong> by other product market reforms in the pipeline, giv<strong>en</strong> the pervasive relevance of<strong>en</strong>ergy in the economy.• To increase choice among consumers, restrictions are to be eliminated, starting with business consumers, and later for allconsumers. The governm<strong>en</strong>t committed to adopt legislation by June so that from 1 October all gas industrial consumerswill be fully eligible to choose their supplier. This would also have the implication to remove restrictions to cross-sellingelectricity and gas. All other costumers would be free ("eligible") to choose their supplier later, based on an action planadopted by the Governm<strong>en</strong>t before the completion of the review.• To improve market operations, the unbundling of network developm<strong>en</strong>t and maint<strong>en</strong>ance from supply will also beintroduced with new legislation adopted by <strong>en</strong>d September 2014. From 1 July 2015 the network activities of the EPAswould be separated from their supply activities and would be regulated, thus stimulating the growth of the distributionnetwork, and, through this, of gas demand.• To spell out the further reforms and actions needed to further improve the functioning of this market, increase choice andaccess to other sources, and stimulate demand and move towards a more effici<strong>en</strong>t use of gas, a compreh<strong>en</strong>sive action planfor the reform of the gas market has be<strong>en</strong> approved by the Governm<strong>en</strong>t before the completion of the review. Thisincludes the creation of a wholesale market, easier access to LNG, scope for the growth of the distribution network, andthe promotion of the use of gas as heating fuel.In the electricity market:• To make the managem<strong>en</strong>t of capacity more cost-effective, capacity paym<strong>en</strong>ts would be reduced, progressively butstarting immediately, taking into account the need for capacity adequacy and a suffici<strong>en</strong>t response to peak demand. Thisimplies a reduction in the quantity of capacity remunerated, but possibly also a reduction in the unit level ofremuneration.• To improve the managem<strong>en</strong>t of electricity demand from <strong>en</strong>ergy int<strong>en</strong>sive companies, state-aid- and third-packagecompatibleinterruptible contracts would be introduced, providing to them comp<strong>en</strong>sation for this service.• The costs of <strong>en</strong>ergy-int<strong>en</strong>sive companies could be reduced further through the state-aid-compatible and fiscally-neutralcomp<strong>en</strong>sation of CO2 costs incorporated in electricity costs.• To bring competition in the supply side of the electricity market, the auctioning of PPC capacity (NOME) would bebrought ahead and started on 1 September 2014.• To further reduce distortions in the structure of electricity prices, on 1 July 2014, PPC would take the decision to reviseits tariff structure, including discounts, to take into account the measures tak<strong>en</strong> by the governm<strong>en</strong>t.The b<strong>en</strong>efits of the package, if properly implem<strong>en</strong>ted, are manifold. Many restrictions would be lifted and markets would bemade more competitive. Consumers would b<strong>en</strong>efit from greater choice. Households would have access to a cheaper and lesspolluting <strong>en</strong>ergy source for heating. The b<strong>en</strong>efits of lower gas prices, and future increased supply, would be fully reaped.Energy-int<strong>en</strong>sive industries would see an improvem<strong>en</strong>t in their competitiv<strong>en</strong>ess. Gas companies would be exposed tocompetition, but on the other hand would have access to a wider market. Last, but not least, a significant interv<strong>en</strong>tion inPPC's tariff structure, which could <strong>en</strong>danger its profitability, would be neutralised.The rapid and cumulative implem<strong>en</strong>tation of this package would be a powerful signal that a key product market reform isbeing undertak<strong>en</strong> in Greece, an important message both for consumers, businesses and investors. Strong commitm<strong>en</strong>t to andimplem<strong>en</strong>tation of such reforms by the Greek authorities appears crucial for supporting a sustained economic recovery.3.6.2. Electronic communications118. The authorities have committed to launch the public consultation on the t<strong>en</strong>der procedure for theassignm<strong>en</strong>t of the digital divid<strong>en</strong>d (800 MHz band) allocating and authorising the use of the digitaldivid<strong>en</strong>d to Electronic Communication Services by April 2014, and launch the t<strong>en</strong>der procedure itselfby June 2014, so as to respect the October 2014 deadline for the assignm<strong>en</strong>t of the frequ<strong>en</strong>cies of thedigital divid<strong>en</strong>d.62
3. Programme implem<strong>en</strong>tation3.6.3. Transport119. Major strategic changes are underway in the transport sector, while chall<strong>en</strong>ges remain. In theairport and maritime sectors, the authorities are pursuing reforms needed to facilitate a properfunctioning of markets and a str<strong>en</strong>gth<strong>en</strong>ing of the regulatory framework.120. The privatisation of airports is proceeding. The second phase of the t<strong>en</strong>dering process is progressingwith sev<strong>en</strong> investm<strong>en</strong>t <strong>en</strong>tities being qualified to participate for the concession of the managem<strong>en</strong>t,operation and maint<strong>en</strong>ance of the regional airports, t<strong>en</strong>dered in two clusters. The other airports will begrouped in a company b<strong>en</strong>efitting of a ring-f<strong>en</strong>ced and transpar<strong>en</strong>t financing mechanism creating in thisway the conditions for a separation of the operation activities from regulatory aspects. This privatisationstrategy will provide concession agreem<strong>en</strong>ts to cap airport charges at an average regional b<strong>en</strong>chmarklevel with the aim of preserving the competitiv<strong>en</strong>ess of the tourism sector. The privatization of theregional airports is expected to lead to investm<strong>en</strong>ts that will increase the capacity of the airports,increase their service level standards and facilitate tourism and economic developm<strong>en</strong>t.121. Important reforms are underway in the maritime sector. The authorities int<strong>en</strong>d to introducemeasures with the aim to further improve the competitiv<strong>en</strong>ess of the sector. This includes allowingoptionally firm labour agreem<strong>en</strong>ts in the domestic ferry sector, irrespective of whether there is or not asectoral collective labour agreem<strong>en</strong>t in place, allowing companies to distribute freely across their fleetthe days they stop operations during the winter season and increasing the flexibility of the manningrequirem<strong>en</strong>ts. The authorities have already launched key assets for privatisation with the aim to <strong>en</strong>suresustainable and self-financing port authorities, to attract additional capital and managerial expertise andimprove the competitiv<strong>en</strong>ess of the sector from a regional and international perspective. Setting up astrong regulator for ports is a key priority in view of the privatisation of ports, in particular those ofPiraeus and Thessaloniki. The authorities int<strong>en</strong>d to str<strong>en</strong>gth<strong>en</strong> the port regulator by appointing theBoard of Directors and implem<strong>en</strong>ting secondary legislation by the <strong>en</strong>d of the t<strong>en</strong>der process for theports.122. Additional policies are in the pipeline to <strong>en</strong>sure a better intermodal connectivity betwe<strong>en</strong> differ<strong>en</strong>tmeans of transport. This includes prioritising public sp<strong>en</strong>ding (including EU funds) by creating atransportation and logistics hub and better exploiting Greece's regional competitive advantage.3.7. INCREASING THE IMPACT OF STRUCTURAL AND COHESION FUNDS123. The authorities continue to improve significantly their absorption of EU funds. As a country underfinancial assistance, Greece has b<strong>en</strong>efited from higher co-financing rate (10% top-up) since May 2010.In 2013, a key achievem<strong>en</strong>t has be<strong>en</strong> the re-launch of the major motorway projects which constitute asignificant part of the co-financed activities. These projects that had stalled since the onset of the crisisbecause of the strong fall in traffic and in related (prospective) rev<strong>en</strong>ues and of the financial difficultiesfaced by the involved <strong>en</strong>tities. Accordingly, by the <strong>en</strong>d of the 2013, the authorities have submittedpaym<strong>en</strong>t claims of EUR 4.56 billion, including EUR 1.5 billion for the motorway projects, which issignificantly higher than the annual target of EUR 3.89 billion. The absorption rate (79.2 %) for 2007-2013 is now clearly above the EU average (65.2%), in part due to the higher co-financing rate and theEU allocations to the Financial Instrum<strong>en</strong>ts (EUR 1.3 billion). The authorities have delivered theearmarked amount in the national budget for the completion of the unfinished projects of ERDF andESF from the previous programming period.124. The authorities continue to implem<strong>en</strong>t the priority projects. A monitoring mechanism providesregular information and an early warning system that lead to rapid actions to tackle problems. 51projects have be<strong>en</strong> completed, but considerable effort still has to be deployed in order to complete allpriority projects by <strong>en</strong>d 2015. There has be<strong>en</strong> progress on the simplification of the procedures,particularly on the establishm<strong>en</strong>t of an alternative mechanism for the approval of paym<strong>en</strong>ts and for theestablishm<strong>en</strong>t of the electronic paym<strong>en</strong>t. In addition, for the main categories of projects co-financed bythe Structural Funds, it is necessary to review the curr<strong>en</strong>t legal and administrative framework governingtheir implem<strong>en</strong>tation in view of its simplification which includes the lifting of unnecessary steps and theclarification of compet<strong>en</strong>ces. These are key requirem<strong>en</strong>ts that will simplify and accelerate project63
Change language