Greece: Mytilineos’s “small PPC” formed by 2020

During a time when the power market is shocked by PPC’s turbulence and the effort of the dominant player to recover from wrong strategic choices and the new global reality in the sector, the private sector shows the strong investing and growing potential that exists.

In July, Mytilineos’s deal with General Electric for the purchase of machinery (gas turbines) for its new CCGT (Combined Cycle Gas Turbine) plant was completed. The 300 million Euros investment is the first in power production with gas in the last 10 years and seals the dramatic changes in the power market on an international level, as part of the policy to decarbonize.

Mytilineos’s investment decision, but also the interest from other market players to build new gas plants, show the market’s expectations that on the one hand, measures to remediate the sector will proceed and on the other hand that we have already entered the post-lignite era, at least in terms of competitiveness of power production. In any case, it is not random that the deal concerning Mytilineos’s investment was signed after the elections.

The biggest center

Construction works for the new plant will begin in September and will be completed by November, 2021, as the head of the group, Evangelos Mytilineos, announced, in order for it to enter the system at the beginning of 2022. The plant, which will have a capacity of 826 MW, will be the largest in the country’s power system and will be installed in the energy center of Ag. Nikolaos, Voiotia, turning the area into Greece’s largest energy and industrial center.

Already, Protergia’s CCGT plant of 444 MW operates in Aspra Spitia, but also Alouminion’s cogeneration plant of 334 MW. This means that together with the new plant, Mytilineos’s center in Voiotia will be the largest energy center of the country with power producing plants of 1,604 MW, while Agios Dimitrios of PPC with old lignite plants constructed in 1983 has a capacity of 1,456 MW, while Kardia that will be decommissioned in two years, has 1,110 MW. Of course, apart from Agios Nikolaos, Mytilineos has the largest share in Korinthos Power’s plant (395.9 MW).

A modern plant

Contrary to the old and ineffective PPC’s lignite fleet, the new gas plant will be among the most modern not only in Greece, but globally. According to announcements concerning the supplier (General Electric), the class technology air turbine will have a thermal efficiency of over 63%, while a similar PPC plant in Ptolemaida is expected to have 40.5%. The cost of Mytilineos’s investment is 300 million Euros, about one fifth of the investment in the Ptolemaida 5 lignite plant (1.4 billion with 660 MW). High efficiency plays a special part for the plant’s competitiveness, since it emits less CO2 per MWh, which means a lower cost, especially during a time when CO2 prices rally at almost 30 Euro/tonne.

Included for the first time in the FTSE4Good index

Mytilineos is now included in the recognized sustainable development stock index FTSE4Good (Emerging Index), that targets promoting investment in listed companies with a significant contribution to society, the environment and corporate governance, after the positive evaluation it received in June, 2019, from the international organization FTSE.

According to its evaluation, Mytilineos scored high in all three segments, thus satisfying the high standards of the FTSE4Good Emerging Index. With a total score of ESG:3.9 out of 5, the company managed in its first inclusion to achieve a score better than 79% of the evaluated companies in the sector of industrial products and services. More than 540 companies from 24 developing markets are included in this index.

Mytilineos’s presence in more and more international sustainable development indexes is a recognition of the group’s significant efforts in Corporate Governance, as well as its commitment to ensure sustainable development values in its operation.

The FTSE4Good indexes have been designed and developed by FTSE Russell, which specializes in corporate evaluation according to the best global practices in social, environmental ans ESG issues. They are an important tool to evaluate listed companies in sustainable development with the target of socially responsible investment.

  1. Mytilineos: The crisis helped Greeks open the windows to the world

German newspaper Frankfurter Allgemeine Zeitung presented E. Mytilineos as one of Greece’s biggest and most successful businessmen, who after years of dealing with the crisis, now has a reason to face the future with optimism.

The liberal and reform friendly new head of the government brings hope to Greek businesses that the country will finally make an economic step forward, after the loss of over one quarter of GDP, says the newspaper and notes that contrary to the Greek economy, Mytilineos had significant growth during the years of the crisis.

Starting with the crisis outset in 2009, the group’s sales was 662 million Euros, while net profit was 14 million Euros. In 2018 it closed with sales of 1.53 billion Euros and net profits of 141 million. During all this time there were years with wide programs of austerity and restructuring, however the group never reported any damages.

The report features statements by Mr. Mytilineos, who underlines that the group was saved thanks to its differentiation and the synergies between its different activities. “In hard times, the different arms support each other, while in good periods they make strides”.

The German newspaper presents Mytilineos’s activities which include one of Europe’s largest aluminum producers with its own bauxite mines, power production through natural gas, which is imported by the group itself and also construction. For power production, Mytilineos imports gas and is not dependent on the old public monopolies. In this way, it can bring to the Greeks not only power, but also gas.

The newspaper flashes back to the 65 year old businessman’s course, who created the group out of a middle size family business. In contrary to the children of large family dynasties, Ev. Mytilineos did not study in American schools or worked in international banks. He completed his studies with a postgraduate degree in the London School of Economics and took over his family business, formed in 1908, at the age of 24. 21 years later, in 1995, followed its listing and afterwards the construction of power plants, in 2005 the aluminum company and the next year the entrance in the renewables market with wind farms.

As for the company’s course during the crisis, FAZ notes that Mytilineos acquired multiple benefits: On the one hand, Spanish energy group Endesa wanted to leave the Greek market in 2010 and sold its energy subsidiary. On the other hand, Greece’s creditors insisted on the opening of the power and gas market, according to the remediation measures. The opening of the market and the purging of union establishment led in turn to the offering of more competitive prices on behalf of Mytilineos. “We are good, we are economical and we have the know-how”, is the businessman’s most liked phrase.

Even when – or especially when – business people in Greece are successful, they are not well liked. This happens because a part of Greeks retains a negative stance against businessmen for ideological reasons, while others remember the era of “oligarchs”, when during the 70s and 80s businessmen conspired with politicians to achieve advantageous conditions for control of the small market.

As the newspaper mentions, Evangelos Mytilineos does not want anything to do with this picture: “One should understand that this is not just about the local market. One must accommodate to the global market and attract foreign capital with his company”. Mytilineos considers a positive thing that apart from his family’s share of 26% there is also a 39% share belonging to foreign investors. In order for a foreign investor to be interested for a Greek company, “corporate governance” must be first implemented. For Mytilineos, this means that the board of eleven is not constituted solely by family members, but also by seven independent members.

The newspaper notes that Evangelos Mytilineos gives the attention of an economist rather than a manager that focuses on the details. His vision saved the group from problems during the economic crisis, when bank lending ended, since he acted in time.

The report also focuses on the previous government, saying that Mr. Mytilineos pinpointed the deviations of SYRIZA’s partly extreme left policy with the same vigor. “Some of them do not like businesses and feel bad even during the latest stage of a new industry’s licensing”.

According to FAZ, even though Evangelos Mytilineos made the effort to cooperate constructively with the SYRIZA government, he now feels relieved and turns his gaze on the future of the Greek economy: The crisis helped Greeks open the windows to the world. They had to learn to seek success not just as individuals, but where necessary, through common action.

Closing its report, FAZ noted that the successful Greek businessman and his group look forward. This is true because during the term of the new liberal prime minister, Mitsotakis, the old monopoly will be likely dissolved as well as power market distortions. This means that the new government does not have another option, since the left spoiled state group is now in danger of bankruptcy. The hope is clearly reflected on the share price. Since the day of the European elections, which hurried national elections and gave victory to the reformers, the value of Mytilineos shares was increased by 27%, ends the report of the German newspaper.

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