As if Greece didn’t have enough fires to put out, a new one just sprang up over the weekend – and it’s a doozy.
Apparently, the country could lose at least 30% of its power supply and enter into a period of rolling blackouts as soon as June 14 – just in time for its next round of elections.
These blackouts would be day-to-day and pose an obvious threat not just to Greece’s finances, but its political and social stability, as well.
Reuters – which saw a letter from Greece’s state-owned gas agency, DEPA – was the first to report on the potential crisis.
The letter was sent by Haris Sachinis, DEPA’s Chairman and CEO, to Greece’s energy regulator, RAE. Essentially, it said that DEPA, which imports natural gas and then sells it to Greece’s power companies, hasn’t been receiving payments from those companies. As a result, it’s not been able to pay overseas suppliers like Eni SpA (NYSE: E) and Gazprom (PINK: OGZPY).
Now, DEPA says it needs 100 million euros in cash to pay Turkey’s BOTAS by June 15 and Russia’s Gazprom by June 22. If it doesn’t get that money by June 14, DEPA will start cutting off supplies.
Hoping to avert catastrophe, RAE has called an emergency meeting for today, June 6. However, its options are few, and if a compromise isn’t reached the country may lose power for long periods of time.
And the timing couldn’t be worse.
You see, Greece is set to hold another round of elections on June 17. The last round in May failed to produce a government. Additionally, the two parliamentary parties that supported the EU-backed bailout and austerity measures suffered tremendous losses at the hands of fringe parties, including the Neo-Nazi Chrissi Avgi party and the Stalinist KKE party.
Just imagine the kind of government that could come into power in Greece if the country doesn’t have any electricity. Odds are it won’t be one that favors staying in the euro.
In fact, Standard & Poor’s said yesterday that there’s now a one-in-three chance Greece will exit the eurozone after its June 17 elections.
S&P warned of a “consequent suspension of external financial support” should the new government reject the austerity cuts Greece promised in return for international bailouts.
So brace yourself, because the Greek crisis may be about to get a whole lot worse.