Current affairs - 11.12.2014

Speech by the Chairman and CEO of PPC S.A Prof. Arthouros Zervos at a signing event with the European Investment Bank

                                                Athenaeum Intercontinental Hotel - Arcade Hall
                                                    Thursday 11th December 2014, 10:55hrs

Your Excellency Minister of Environment Energy and Climate Change,

Mr. President of the EIB,
Mr. Vice President of the EIB,
Ladies and Gentlemen,

Today marks yet again, another important date for the financing of PPC’s strategic investment planning at a Group level and re-affirms that Greece and PPC have the trust of international financial organizations like the European Investment Bank.

As you know, the European Investment Bank has been a leading financing partner of PPC since 1963, with a longstanding and excellent cooperation, having built over the years a relationship of trust.

Historically, the Bank has financially supported investments in all business segments of PPC, including Mining, Generation, Transmission and Distribution. As of the end of November 2014, the outstanding amount of the European Investment Bank loans to PPC Group amount to 2.2 billion Euros.

EIB’s support to PPC over the last years, within a difficult economic environment, has been of major importance, being the primary source of injection of new, long term funding for infrastructure projects which are strategic for the enhancement of the financial and environmental performance of PPC Group, while at the same time also in support of the Country’s competitiveness and security of supply.

In this framework, PPC managed:
• to successfully fund and implement during the last five years a strategic capex program of approximately 4.7 billion Euros,
• to conclude its refinancing with the Greek Banking System and thus to significantly increase the average life of its bank debt portfolio,
• to secure funding for part of the capex of the new power plant Ptolemaida V, through a long term syndicated loan, with foreign banks participation and the cover of the export credit agency Euler Hermes,
• to achieve a significant credit rating upgrade by Standard & Poor’s
and finally
• to tap the international debt capital markets, through a successful bond issuance, the first international bond issuance after almost fourteen years.

Ladies and Gentlemen,

Looking ahead, we continue to make investments in all sectors of our operations, addressing future energy needs but also aiming at environmental excellence and further enhancement of our operational efficiency.

Such investments include:
• new thermal and hydroelectric units in the Interconnected System which will partially replace old and non efficient units that will be decommissioned over the next years,
• the upgrade of capacity and related infrastructure in the non-Interconnected islands, as well as the development of strategic interconnections of certain islands with the mainland system.

It is should be taken into account that throughout its 60 plus year old history, PPC made reality the electrification of Greece, providing electricity to more than 50 islands -through 36 stations operating in such islands-, something unique even by international standards.

Hence, today’s event for the signature of the first finance contract of 80 million Euros, out of a total financing line of 190 million Euros, in accordance with our capex plan for power projects on the non-interconnected islands for the period 2014 to 2019, is of paramount importance for the security of supply and better energy services to the Greek islands, both to local consumers but also towards supporting tourism and economic growth.

Our strategic planning for the non-interconnected Greek islands includes amongst others, the new power plant in the southern part of the island of Rhodes.

The construction of this new thermoelectric power plant of 115 MW net capacity is imperative, taking into account the fast economic growth in the region due to increasing tourism, thus ensuring the long term energy supply of the island, while at the same time achieving high environmental standards.

The development of the new unit will also have positive effect on the employment sector, not only during its construction, but also during its operation while the generated energy will be sufficient to cover the island’s growth perspectives. The construction of the plant has already begun and progresses in a fast pace.Hence, we aim at the progressive operation of the new Unit by May 2016.

Besides the new power unit in Rhodes, the new financing of the European Investment Bank will be directed to other development projects with a total budget of 174 million Euros in seventeen (17) Autonomous Power Plants in several Greek islands. Our goal is the increase of the installed capacity, so as to secure the energy supply of these islands and to replace the old technology units with new ones, friendlier to the environment, as well as in the upgrade and modernization of the existing plants’ equipment and their infrastructure.

I would like to highlight once more that during the last five years – under particularly difficult economic conditions at a country level – as part of our commitment towards our shareholders, strategic partners and consumers, we carried through and successfully implemented many actions and difficult measures, which enhanced our operational efficiency and productivity.
These measures included amongst others, a cost cutting program which reduced controllable expenses and payroll by more than 650 million Euros, while we became more flexible and adaptive to the new environment.

At the same time, we continued to provide valuable support to our most vulnerable customers who have been tested by the crisis, through the provision of special Social Tariffs.

To achieving our goals, we were not alone.

We capitalized on our highly valuable technical expertise and the abilities of our human capital, while we reinforced relationships with important partners, including the European Investment Bank as a strategic financial partner.

Therefore, I would like to thank the leadership of the European Investment Bank and their commitment to financially support major projects and infrastructure works which are important both to PPC Group, but also to the country as a whole.

Thank you
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