120
121
Annual Financial Statements
gas was consumed in generating electricity. Therefore, the Subsidiary
also recognized the part of the Natural Gas ET which corresponded to
consumptions made in generating useful heat (steam for the Alumina
production process) as a liability (deducted from ADMIE’s receivables
balance), the total value of which amounted to
€
9.1m.
Regarding the remaining balance of ADMIE’s relevant briefing note,
which amounts to
€
8.3m and relates to the Natural Gas ET which cor-
responded to consumptions for electricity generation (HE- CHP), it is
noted that this does not constitute a liability for the Group. Specifically,
in accordance with IAS 37, “a liability is a present obligation of the
entity arising from past events, the settlement of which is expected to
result in an outflow from the entity of resources embodying economic
benefits”. Based on the above and given that the Subsidiary has not
received a final compensatory price for the Period (by way of the CC,
see above), while, based on the Private Agreement between the Sub-
sidiary and LAGIE, the final settlement will take place following the
issuance of the relevant Ministerial Decision regarding the establish-
ment of the CC (which has not been issued), the Subsidiary believes
that it has no commitment which would legally constitute an obliga-
tion to return the amount of
€
8.3m. A relevant liability may arise once
the aforementioned Ministerial Decision regarding the establishment
of the CC is issued, in which case the Group estimates that the final
compensation that it will receive for electricity dispatched to the sys-
tem as High-Efficiency CHP will exceed the amount of
€
8.3m. There-
fore, it is not expected that a loss will result for the Company Group.
Finally, in respect of the final settlement of the CHP pricing for 2013
it is noted that, on the 4th of June 2015 the subsidiary Aluminium of
Greece (the Subsidiary), sent a letter to the Operator of the Electric-
ity Market (LAGHE) asking the convene of the Dispute Settlement
Committee as provided in the article 16 p. 2 of the “Supplementary
Agreement for Transactions relating to Electricity from the Dispatch-
able High-Efficiency CHP Station” signed between the parties. The
dispute in consideration concerns the imposition of a 10% special tax
plus an extra 10% of one-off discount on tariffs, both regarding the
financial year 2013. On 11/6/2015 LAGIE accepted the request of the
Subsidiary and further actions are expected to occur within the follow-
ing period.
The minutes of the off-court Settlement Committee dated 24/11/2015,
confirmed the failure for a settlement agreement between the parties.
Mytilineos SA with its letter dated 21/1/2016 proposed to the Greek
Operator of Electricity Market (LAGIE) to bring the said dispute to ar-
bitration after the Regulatory Authority for Energy (RAE) based on the
provisions of the article 16 par. 4 of the Supplementary Power Pur-
chase Agreement signed between the parties on 28/11/2012. Further
to that, Mytilineos SA has also attached a draft arbitration memoran-
dum pending LAGIE’s final consent.
Power purchase agreement between ALUMINIUM OF GREECE
and PPC
Following arbitral decision no. Δ1/1/2013, which was issued by RAE’s
Permanent Court of Arbitration on 31.10.2013 and which defined the
fair, reasonable and worthy price for the electricity supplied by PPC
to ALUMINIUM OF GREECE (henceforth the “Subsidiary Company”)
during the period of time between 1-7-2010 and 31-12-2013, the two
parties have not signed a power purchase agreement for the period
between 1/1/2014 and the date on which the financial statements for
the year 2014 were published.
On 7/1/2014, PPC’s Board of Directors requested the convening of an
Extraordinary General Meeting, the main topic of discussion of which
concerned the terms by which the Subsidiary Company would be
charged from 1/1/2014 onwards. PPC’s Extraordinary General Meet-
ing eventually convened on 28/2/2014 and decided the following:
For the fiscal years that have not been inspected by the tax authorities (as report-
ed in the above table), there is a possibility of additional tax imposition. Therefore
the Group assesses, on an annual basis, the contingent liabilities regarding ad-
ditional taxes from tax inspections in respect of prior years and makes relevant
provisions where this is deemed necessary. The Management assesses that
apart from the recorded provisions which as at 31.12.2015 amount to
€
1,3mil.,
any tax differences that may arise in the future will not have a material impact on
the financial position, results and cash flows of the Group.
For the fiscal year 2012 and 2013, the Group companies which were subject to
tax audit by statutory auditors or audit firm, received a Tax Compliance Certificate
free of disputes in 2013 and 2014 accordingly.
For the 2014 tax audit, the companies of the Group which operate in Greece have
been subjected to a tax audit by Sworn Auditors according to article 65A par. 1 of
law 4174/2013 and of law 4262/2014. Said tax audit has been completed during
2015 and the tax certificates were distributed by the statutory auditors.
For fiscal year 2015, the tax audit which is being carried out by the auditors is
not expected to result in a significant variation in tax liabilities incorporated in the
financial statements.
The tax audit for the parent company Mytilineos S.A. for the fiscal years 2007-
2010 has been completed by the relevant authorities of Ministry of Finance. The
differences that arose from said tax audit amounts to
€
760k.
4.35.2 Other Contingent Assets & Liabilities
Note on Independent Power Transmission Operator S.A. (ADMIE)
On 17.12.2014, Independent Power Transmission Operator S.A. (IPTO or ADMIE)
sent briefing notes to our subsidiary company, Aluminium of Greece (henceforth
the “Subsidiary”), requesting the issuance of a credit invoice for the amount of
€
17.4m relating to the Excise Tax (ET) on Gas consumed at the Combined Heat
and Power (CHP) Plant for the period of 28/11/2012 until 31/10/2013 (henceforth
the “Period”). Said ET was invoiced to ADMIE during the aforementioned period,
pursuant to its related debit notes.
In relation to the above, we note the following:
- The CHP station is a dispatchable cogeneration unit, part of which qualifies as
highly efficient (High-Efficiency Combined Heat and Power/ HE-CHP) under
the Code’s provisions, but also under the specific operational terms which
were approved by way of RAE’s Decision No. 700/2012 (as amended by
Decision 341/2013).
- According to Article 197(2) of Law 4001/2011, from 1/9/2011 onwards, all HE-
CHP stations, regardless of their installed capacity, gain priority for the al-
location of their loads. In particular, in accordance with Article 197(3) of the
above Law, HE-CHP stations with an installed capacity over 35MW are to be
compensated with the tariff which derives from the table displayed in Law
3468/2006, plus the Natural Gas Clause Coefficient (CC), which is calculated
using the following formula: CC = 1+(AGP-26)/(100 x nel)
Where:
• AGP: the monthly mean average unitary selling price of natural gas to NG
users in Greece who are also electricity customers, in
€
/MWh using the gross
calorific value (GCV). This value is determined by the Ministry of Environment,
Energy and Climate Change’s Petroleum Policy Directorate and is communi-
cated to Hellenic Transmission System Operator S.A. (HTSO or DESMIE) on
a monthly basis.
• nel: the electrical efficiency of the provision for
High-Efficiency CHP based on the gross calo-
rific value (GCV) of natural gas, which is defined
in accordance with the station’s technical infor-
mation, as reported by the relevant Operator.
The CC value cannot be lower than one (1) and
is determined on a case-by-case basis by way
of a decision made by the Minister of Environ-
ment, Energy and Climate Change (henceforth
the “Ministerial Decision”) following consultation
by RAE. RAE’s opinion must also take the plant’s
installed capacity into account, in a way so that
the determined value generally decreases as the
capacity increases.
Moreover, the AGP is displayed in
€
/MWh and
includes the ET, as specified in the letter sent
by the Ministry of Environment, Energy and Cli-
mate Change’s Petroleum Policy Directorate on
2/11/2011.
The High-Efficiency CHP station owned by the
subsidiary company Aluminium of Greece has an
installed capacity of 334MW, of which 134.6MW
has priority in entering the system (HE-CHP) in ac-
cordance with the aforementioned decisions which
approved the Specific Operational Terms. From
1/9/2011 until 31/10/2013 (which ADMIE set as the
final date for settling the ET), the CC value, as de-
fined above, had not been established because the
relevant decision had not been issued by the Min-
ister of Environment, Energy and Climate Change,
despite the fact that the Regulatory Authority for
Energy had issued two relevant opinions in accord-
ance with the provisions of Article 197(2) of Law
4001/2011 (RAE 3/2012 and RAE 5/2013). Conse-
quently, the Subsidiary’s HE-CHP neither issued
invoices nor received a tariff in accordance with the
provisions of Law 4001/2011. Instead, following the
signing of a Private Agreement between the Subsidi-
ary and the Operator of Electricity Market (LAGIE) on
26.4.2013, HE-CHP issued temporary invoices, for
the entire aforementioned period, at the minimum
price which could have resulted from the applica-
tion of the mathematical formula established by Law
4001/2011 (if the CC value was set at the unit price,
i.e., if the AGP amounted to 26
€
/MWh). According
to the Private Agreement, the final settlement was
to take place following the establishment of the CC
by way of the issuance of the relevant Ministerial
Decision, so that dispatched HE-CHP energy would
be compensated in accordance with the provisions
of the “Supplementary Agreement for Transactions
relating to Electricity from the Dispatchable High-
Efficiency CHP Station” (Government Gazette B’
3108/23.11.2012) which was concluded between
the Subsidiary and LAGIE on 28.11.2012.
The aforementioned provisions of Law 4001/2011, in
conjunction with the provisions specified in the let-
ter sent by the Ministry of Environment, Energy and
Climate Change’s Petroleum Policy Directorate, as
well as the provisions of both the Subsidiary’s Pri-
vate Agreement with LAGIE and the “Supplementary
Agreement for Transactions relating to Electricity
from the Dispatchable High-Efficiency CHP Station”
between the two parties, require that the Natural
Gas ET is recovered to the extent that the natural
a) The provision of an exceptional discount of 10%
on PPC’s approved tariffs for High Voltage custom-
ers, for 1 + 1 year, from 1.1.2014 onwards.
b) A further 10% discount on top of the aforemen-
tioned discount for High Voltage customers with an
annual consumption over 1000 GWH.
c) A further 25% discount on the A4 tariff for all High
Voltage customers, apart from those with an annual
consumption over than 1000 GWH, for consumption
during off-peak hours of minimum demand (night-
time and weekends), as an incentive for increasing
consumption during these time periods.
The Subsidiary considers that the content of the
decision taken during PPC’s Extraordinary General
Meeting, under a, b and c above, merely constitutes
an offer of pricing terms on behalf of PPC, towards
their large industrial customers. In this respect, the
Subsidiary Company has engaged in discussions
with PPC in good faith, expressing both its opinions
and its reservations in relation to the terms and con-
tent of the power purchase agreement under nego-
tiation. In particular, the aforementioned decision of
the Extraordinary General Meeting of PPC’s share-
holders has been considered taking into account rel-
evant developments in general. Among other things,
said developments relate to the rejection of all the
judicial and administrative proceedings instituted by
PPC against the Arbitral Award and RAE’s Decision
no. 346/2012 (the decision which determined a tem-
porary price to be applied until RAE’s Permanent
Court of Arbitration’s final adjudication) before both
the Administrative Court of Appeal of Athens and
the European Commission’s Directorate-General for
Competition, a fact which confirms and updates the
fairness and reasonableness of the price at which
the Court of Arbitration concluded.
Consequently, given that as of the date of ap-
proval of MYTILINEOS HOLDINGS SA’s annual
financial statements of 2015, the two parties have
not yet reached an agreement in relation to the ba-
sic terms for charging electricity supplied by PPC
to the Subsidiary , the latter has announced in the
results for the period in question that the competi-
tive component of the electricity price amounts to
the value which has most recently been held to be
fair and reasonable (by RAE’s Permanent Court of
Arbitration), plus the Use of System charge, the SGI
charge, the Special RES Duty charge and charges
relating to the relevant Special Consumption Tax,
Execution of Customs Operations (ΔΕΤΕ) and provi-
sions for non-recoverable (by way of the compensa-
tion mechanism) carbon dioxide (CO2) emissions
costs.
However, it is noted that during 2015, PPC, act-
ing arbitrarily and unilaterally, invoiced the Sub-
sidiary Company based on the “A5” tariff, without
incorporating the discount decided in the General
Meeting, noting that the discount would only apply
retrospectively if the Subsidiary Company accepted
and signed PPC’s terms. Finally, on the 12th and
13th of January 2015, without the Subsidiary’s ac-
ceptance of the aforementioned terms, PPC issued
credit notes as a result of the re-pricing of electricity
