Greece Pins Hopes On Gas, Betting

With Greece’s privatization plans lagging – and set back again when the head of the agency overseeing it stepped aside in a burgeoning scandal involving the nation’s electric company – the government is hoping that bids for its money-making lottery and gambling operation OPAP and gas monopoly DEPA and grid operator DESFA due by the end of April will kickstart the program again.
The Hellenic Republic Asset Development Fund (HRADF)’s Chief Executive Officer Ioannis Emiris told the news agency Bloomberg in an interview in his office that the proceeds will make up the bulk of the 2.3 billion euros ($3 billion) that Greece needs to raise from sales this year, he said.“There is no turning back,” Emiris said. “It’s a program that must proceed. It has been decided by law, and it has already begun. There’s no stopping it.”
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is putting up 240 billion euros ($313.5 billion) in two bailouts to prop up the country’s economy but has insisted on harsh austerity measures as well as other reforms, such as the sale or lease of state entities and properties to help make a dent in the country’s staggering $460 billion debt.
Since the loans began in 2010, the government has repeatedly promised but failed to push privatizations that once aimed at raising 50 billion euros ($65.3 billion) but has realized only a miniscule amount of that. The government hopes to get at least 7 billion euros ($9.14 billion) bu selling everything from islands to airplanes as well.
The sales now are designed to signal that Greece is laying out the red carpet for investors, said Emiris, who took over running the privatization agency in July last year after a change of government following two elections. “DEPA and OPAP are the most important,” said Emiris, 49. “If we make it with these two, then we will make the greater part of the revenue target.”
Anti-bailout parties gained support among Greek voters last year, forcing the suspension of asset sales but Prime Minister Antonis Samaras is trying to speed the pace to meet Troika demands and raise critical cash. Progress has been slow. The IMF warned in January that the government needed to match “results with rhetoric,” calling the performance so far “extremely disappointing.”
Asset-sales targets were revised lower, to 22 billion euros ($28.7 billion) by 2020, instead of a previous 45 billion euros ($58.7 billion.) This year, Greece will raise about 2.6 billion euros, ($3.39 billion) and 2.3 billion euros ($3 billion) will be from new sales, Emiris said. DEPA supplies gas to Greek companies and households while DESFA operates the infrastructure to deliver it.
Russia’s Gazprom, the biggest natural-gas company in the world, is the most prominent of the five bidders who have expressed interest in buying Depa. Gazprom, which supplies about a quarter of the European market with gas, is competing with a joint venture by Greek companies Mytilineos and Motor Oil Hellas for DEPA, OJSC Negusneft which has bid for both companies, and Gekterna and the State oil Co. of Azerbaijan, or Socar, which made separate bids for DESFA.
OPAP, which had sales of 4 billion euros ($5.22 billion) last year, has drawn interest from seven companies for a 33 percent stake, including private equity firms BC Partners Ltd. and TPG Capital. Projects under way by HRADF include sales of properties in London and Belgrade and the development of Hellenikon SA, the site of the former Athens International Airport, he said.
The fund said in September it selected London & Regional, Elbit Cochin Island Ltd. and Lamda Development SA (LAMDA) for the second round of bidding for the old Hellenikon airport on Athens’ prime southern coast which at 6.2 million square meters, is more than three times the size of Monaco. Qatar Diar Real Estate Investment Co. has also expressed interest.
The slate this year includes sales of stakes in Thessaloniki Water and Sewage Co., which is 5 percent owned by Suez Environment Co., majority holdings in ports, Public Power Corp. SA and the biggest airport, Athens International.
Emiris said Hochtief AG (HOT), which owns 40 percent of the airport plus one share, “wants to sell as far as we know.” Greece wants to coordinate efforts with the German builder so that investors can be offered about 95 percent of the company along with an extension of the concession to run the airport.
“Any investor coming to Greece right now is coming into a situation which will continue to improve,” Emiris said. They are “investing in a country which will be completely different in two years’ time,” he said.