By Angeliki Koutantou
ATHENS (Reuters) - Greece is in talks with Canada's Eldorado Gold Corp <ELD.TO> to secure higher royalties from its mining development projects and new jobs, Energy Minister Kostis Hatzidakis said on Monday.
Vancouver-based miner Eldorado has two operating mines and two development projects in northern Greece and its planned investment is viewed as one of the biggest in the country in years.
The projects have, however, repeatedly stalled over licensing delays and environmental concerns.
They have become flagship schemes for Greece's new conservative government, which took office in July with a pledge to unblock foreign investments and help boost economic output crimped by a quarter through years of financial turmoil.
Early this month, the government issued installation permits for Eldorado's Skouries project.
"We want to move ahead with a contract which, on the one hand, will send a business-friendly message, and on the other hand, a contract that will secure more jobs, more royalties and clear environmental protection for the region in line with European standards," Hatzidakis told Reuters.
"There are negotiations right now. What we have told Eldorado Gold is that we don't want these negotiations to slow down, but it also depends on the proposals they will present. We cannot reach an agreement at any expense."
One standoff between the previous leftist-led administration and Eldorado was over the company's plan to build a metallurgical plant to process ores mined in Skouries. The government had said that plan was deficient.
Eldorado is open to revisiting royalty rates in the country, Chief Executive George Burns said on Monday at an industry conference in Denver, Colorado.
"The royalty scheme in Greece, I would say, is modestly in the middle of the range worldwide for countries, so we are open to discussions about that," he said in an interview.
He said the company is awaiting a permit for its dry-stack tailings and a separate approval for relocating antiquities at the project site.
Eldorado will seek a strategic partner to help fund the remaining $680 million in development costs at Skouries while retaining the role of project operator, Burns said.
New Prime Minister Kyriakos Mitsotakis has said that the government could revise the contract to possibly include a new investment by Eldorado in another Greek region.
GAS UTILITY SALE
Mitsotakis has also been keen to speed up privatisations in the energy sector, including natural gas utility DEPA, which is 65% state-owned.
The previous government passed legislation that split DEPA operations, with the aim to sell a 50.1% stake in its commercial business and a minority stake in its distribution networks across Greece.
Hatzidakis said he would soon amend that law to allow for the sale of majority stakes both in DEPA's retail operations and its distribution grid.
"We have indications that there will be strong (investor) interest."
Hatzidakis, 54, a former European Union parliament member, has been tasked to work on a rescue plan for state-owned Public Power Corp (PPC) <DEHr.AT> which has been struggling with 2.7 billion euros ($2.99 billion) of unpaid bills from customers unable to pay during the country's financial crisis.
Authorities increased electricity rates and reduced discounts offered to customers who paid on time in September in an attempt to plug a cash shortfall estimated at more than 900 million euros.
Hatzidakis also pledged that the state would settle subsidies owed to PPC in return for providing cheap electricity to vulnerable customers and remote islands.
"It's about 200 million euros and will be paid in the coming months," he said.
Under its post-bailout commitment with its international lenders, Greece has agreed that PPC will sell power to its peers at below-cost prices to help open up the sector via the so-called NOME auctions. Hatzidakis says this has cost the utility about 600 million euros and the NOME auctions would be scrapped.
The government has been discussing with its lenders alternative structural measures for PPC and the energy market, which included the gradual decommissioning of coal-fired plants and the partial privatisation of the power distribution grid, Hatzidakis said.
"NOME will be scrapped and the auction which is scheduled for October will not take place," he said.
"The government needs to have finalised structural measures for the energy market and PPC by the end of October, mid-November."
(Reporting by Angeliki Koutantou in Athens and Jeff Lewis in Denver; Editing by Emelia Sithole-Matarise and Matthew Lewis)