The latest government-opposition tussle in Greece this week revolves around yet another “last ditch” plan to salvage, via liquidation, the debt-laden and loss-making Larco metallurgical unit in south-central Greece, which for decades has been one of the Greek state’s most controversial holdings.
Larco General Mining & Metallurgical Co. S.A., its full name, is also the largest debtor of state-run Public Power Corp. (PPC), the dominant electricity utility in the country, comprising 80 percent of PPC’s high voltage arrears.
The conservative government wants to place the company into a special liquidation regime under strict deadlines, with an international tender to follow for one of the biggest – and also technologically outdated – ferro-nickel production companies in Europe. If the tenders or tender is null and void then bankruptcy procedures will follow.
The aim, at least according to the government, is to keep production going but under a vastly different business model, given that Larco has racked up more than a billion euros in debts and posts losses with every day of production.
The prospect of a privatization or, worse, bankruptcy, generated a firestorm of criticism by the opposition this week, with leftist former prime minister Alexis Tsipras this week returning to his pre-2015 form by promising a Larco workers’ union to oppose any privatization, shutdown or even a scaling back of benefits for its current workforce.
According to the latest figures released by the relevant energy and environment ministry, Larco closed 2018 with a negative net position of 308 million euros, while over the 2015-2018 period it posted accumulated losses of 148 million euros, with 2019 expected to be even worse.
Total debts to third parties, such as suppliers, contractors, banks and insurance funds exceed 600 million euros, of which 350 million euros are arrears to PPC. In fact, every month that passes adds another five to 5.5 million euros in arrears to PPC.
ATHEX-listed PPC’s management has already sent legal notice to the metals maker that it will shut off power on Feb. 17 if a payment plan is announced and arrears begin to be covered.
On the European front, Greece has already been convicted by the European Court for not complying with decisions regarding illegal state subsidies to Larco, to the tune of 135 million euros, plus interest.
Finally, Larco faces another fine of 49.5 million euros for greenhouse gas emissions and is considered as an “environmental pariah” along the northern Evoikos Gulf, dumping thousands of tons of rust into the gulf’s waters every year and causing serious air pollution in the region.
