The Greek Power Corporation (DEI) aims into making a considerable entrance into the Balkan market so as to buy out energy resources, and reverse losses being made over the past few years. A Greek American venture is considered as an ally in this endeavor, although difficulties mount that will have their own ramifications concerning the future of the Greek company.

Greeks & Americans in the Balkans

The power company of Greece is heavily relied in lignite production which declines year after year due to depletion of reserves. According to a 2007 Booz Allen report, the cost of lignite extraction in Greece has increased by approximately 50% over the past decade and this trend will continue for the foreseeable future.

The energy developments are of complicated nature and the Balkans are an important aspect of the overall European energy architecture.

The company already cooperates with its American partner, Contour Global and have formed a joint venture -45% each- with the rest shared by the European Bank of Development & Reconstruction. The name is South Eastern Energy Capital (SENCAP). It has as a purpose the acquisition of energy assets in the Southeast European market. Sencap is a start-up company, and does not hold any significant assets. Lastly the International Finance Corporation is considering a 10% share, as it was relayed by the Sencap in the press.

The press office of Dei states that it ' Takes part with Sencap in the ongoing privatization procedures in Albania regarding the hydroelectric plants on sale'. Moreover, there is interest for the Turkish market where the government plans to privatize hydroelectric plants of a 4,000 MW capacity. In this case 'Sencap will either buy or form a strategic partnership with other European companies'. The Greek energy analyst Harris Floudopoulos notes that 'Already the Turkish market is being sought by the Austrian Verbund and the Czech Cez and they will prove very hard competitors for the Greek-American venture'.

In Kosovo the main interest is the lignite mines in Sibovc. It is estimated that they contain 1 billion tons of coal, but the privatization procedure drags on over the past 2 years. According to a recent report by the Joint Office of the EU & the World Bank for South East Europe ' The local government is stalling the process due to corruption fears'. On the other hand local sources point out that there is infight between competing interests within Pristina's administration and the process will not be completed shortly. The Greek power having a 60 year experience with lignite production assumes that it has an advantage along with the fact that it will import energy from Kosovo once the plans moves ahead and assist the local economy.
Presently Sencap has joined forces with Enel and bids against the RWE-CEZ consortium and the proposed project includes the construction of a 2,100 MW power plant that will cover Kosovo's needs and also export electricity.

In Serbia the Greek power has set eyes for the 700MW Tesla lignite power station. In early September 2008, Serbian officials visited Greek lignite stations in order to review the technology being used. For this privatization no developments should be expected before late 2009, since the legal framework has still to be worked upon according to information provided by legal experts in Belgrade that examine the details of the privatization procedures. According to a Belgrade based legal counselor , ‘There are many difficulties in proceeding towards the privatization of the energy sector and the complexities as far as legal details is concerned will certainly delay plans of all parties involved’.

Failures & implications

There have been noticeable failed bids by the Greek power and its joint venture with the Americans in the Balkan region.
In May 2008 it failed to secure the Bulgarian Bobov Dol lignite production complex and a few months latter it also lost a bid for the Negotino power station in Fyrom, a double blow that caused strain for the management of both companies.

Already Sencap is proceeding to file legal action regarding Negotino, because ' A better offer by all terms was drafted in full compliance with the regulatory procedures'. The winner for the Negotino station was the consortium of Hatch, MacDonald Finance Engineering from Canada (Bulgarian business interests) with a $6.2 million lower offer, from the 68 million Sencap offered.

Kosovo & Metojia Eparchy is an important terrain for future energy deals in the Balkans.

For the moment there is media pressure calling for the abdication of plans under the present day scheme, with the main argument being that Contour Global is a finance corporation and it cannot really assist the Greek power into penetrating in foreign markets.

Harris Floudopoulos notes that 'Over the past 2 years the company has not presented a single success despite its optimist business plans, which were estimated at 750 million Euros. It is likely it will cease operation by late next year if it doesn't acquire assets abroad'

It is also of importance to mention that Contour Global is owned by Reservoir Capital headed by Joseph C. Brandt and Craig Huff who are closely related with the departing Bush-Cheney Administration. The change of guards in Washington is another factor to assess for. A Greek diplomat based in Washington over the past few years notes that ‘Bush's Administration was eager to promote American interests in the region through energy ventures with local corporations. That has failed in most respects, whereas Russian & European plans seem to go ahead as scheduled’

Dr. Ioannis Soukiouroglou, representative for foreign energy traders in Athens concludes that 'The Greek power will inevitably accept that it will have to join forces with a large European energy organization, be it German, French, Italian or other and the state will loose its 51% share and management. In today's environment it is difficult to proceed with a national strategy being a medium sized market and with fierce competition ahead'.

It seems that over the next period, the fate of the management of the Greek power will be interlinked with its capability of making a breakthrough in the Balkans with its American partner. Lastly the energy competition in the Balkans is often interlinked with wider geopolitical interests, thus making it a very complicated procedure, on which only the ones combining business acumen and political vision can flourish.