Metka and ETADE Secure Construction Contract for Greek Gas-Fired Power Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--Greek energy utility Public Power Corporation SA (ATH:PPC) (PPC) (Athens) has confirmed the award of a contract to a consortium of Greek companies for the construction of an 811-megawatt (MW) gas-fired power station in Megalopolis in southern Greece.

The consortium, consisting of Metka SA (ATH:METKK) (Neo Iraklio, Greece) and Metka's fully owned affiliate company ETADE SA (Neo Iraklio), was awarded the contract in August, but final approval from PPC was conditional on the consortium's accepting a cost of 500 million euros ($732 million), as opposed to the contract bid of 543 million ($795.6 million).

Additionally, the consortium was required to forego any claims relating to possible delays of up to 13 months in the commencement of commercial operations of the plant as a result of the 400-kilovolt (kV) transmission lines and/or the natural-gas-feed pipeline being unavailable.

Both Metka and ETADE are members of Mytilineos Holdings SA (ATH:MYTIL) (Athens), a leading Greek industrial company. Metka specializes in the design and construction of thermoelectric and hydroelectric power plants, and ETADE is active in the construction of electromechanical equipment suitable for generation of electricity from renewable sources.

The board of the PPC has also approved the call for tenders for a major project to connect the Cycladic Island Group to the Greek mainland grid. The Cycladic Island Group consists of about 220 separate islands in the Aegean Sea, southeast of the Greek mainland. The project is estimated to cost about $514 million.

Because of the geographical layout of Greece, which contains many islands, the country has a fragmented power system and less than half the power plants in the country are connected to the mainland grid. About 75% of the electricity generated in Greece comes from thermal power stations, running on coal, oil or gas, while 21% comes from hydroelectric schemes and 4% from other renewable sources such as wind and solar.

The Greek parliament passed the Electricity Market Liberalization Law in 2001, allowing third-party companies to compete with the PPC. However, by 2004 PPC still supplied more than 96% of Greece's electricity and currently owns almost 93% of the country's installed power-generating capacity of 13,800 MW. However, there still exists the risk of power blackouts during the summer months when the system is pushed to maximum capability. The Government Energy Regulatory Authority estimates that the country needs to add an additional 6,000 MW of capacity by 2015 to guarantee a reliable supply of power.

Under a European Union mandate, Greece needs to generate 20% of the country's electricity from renewable sources by 2010. The government-supervised Center for Renewable Energy Sources (CRES) estimates that up to 15% of the country's energy needs can be produced from windfarms. Some estimates, notably from the E.U. report "Photovoltaics 2010," have suggested that solar power could supply up to 30% of the country's energy needs.

Greece also imports electricity from neighboring countries, notably Italy, Bulgaria and the former Yugoslav Republic of Macedonia. When power demand on the Greek grid drops, the country exports electricity to Albania. Last year, Greece and Turkey signed a two-year energy exchange agreement, under which Greece imports electricity from Turkey during the summer months and exports electricity to Turkey during winter.

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