Public Power Corp profits down 83% - The Best from Greece

The Public Power Corporation (DEI), the country’s biggest electricity producer, reported a bigger-than-expected third-quarter loss, hurt by rising bad debt provisions due to the country's severe recession and growing fears of a further backlash against the state-owned firm.

 

 

DEI posted on Friday a loss of 38m euros, compared to a profit of 172.3m euros a year earlier.

 

PPC officials and analysts fear many customers may refuse to pay after the government decided to collect a controversial property tax through electricity bills -- a last-ditch measure taken in September to meet budget targets under an EU/IMF bailout.

 

"This is a serious issue for PPC, it will certainly lead to payment delays," said an analyst who declined to be named.

 

 

Sales declined 5.9 percent to 4.2bn euros, also below estimates, as businesses, the company's most lucrative clients, continued to curb electricity use or turned to cheaper rivals to save money in the recession.

 

Revenues from electricity sales are expected to shrink 6 percent for the full year, while overall sales are expected to drop by about 5 percent, the company said.

 

The state-controlled company hiked provisions against bad debts by customers to about 42m euros in the quarter, almost as much as in the entire first half of the year.

 

DEI fears that customers may refuse to pay their bills after the government decided to collect a controversial property tax through electricity bills.

 

The move sparked a backlash against the state-controlled company. DEI's leading labour unionists were arrested and charged on Thursday on misdemeanour charges for trying to boycott the tax.

 

With thousands of customers struggling to pay the combined property tax and electricity bills, the government announced on Thursday that DEI will now wait 80 days – double the previous period – before disconnection orders are issued on overdue accounts.

 

Workers have also threatened to unleash a wave of strikes if the government insists on privatising parts of the company as part of the country's EU/IMF bailout plan.

 

Shares of PPC were down 0.9 percent in morning trade, broadly in line with the Athens Stock Exchange.

 

On Friday, the government announced that it was cutting salaries by up to 25 percent at DEI and ten other publicly owned companies.

 

From January 1, consumers will face bill increases of between 10 and 19 percent, although the government has yet to establish the precise figure. (Reuters, Athens News)