A Greek court gave this week the go-ahead for China’s Cosco to increase its stake at the Piraeus Port by 16% and extend its contract by five years for the company to complete the investments it has undertaken to make.
The ruling by the Greek Court of Audit means that the Chinese multinational increases its stake in Piraeus Port Authority (OLP) from the current 51 percent to 67 percent.
The new contract between the Chinese company and the seller, the Greek state, will be signed in the coming days and will then go to the Parliament for ratification, which will probably be voted on in the first half of September.
Cosco demanded that the provision in the privatization agreement allowing it to acquire the extra stake be activated despite not having completed the €300 million investment program it had undertaken to implement within five years of its purchase of a 51 percent stake in OLP from the state for €293.7 million.
The Court of Audit accepted that Cosco is not responsible for the delays in implementing the investment plan. At least some of the delays involve legal wrangling, such as an appeal by locals over environmental concerns that has delayed the upgrade of a cruise terminal.
Cosco itself pointed out, in a November 2020 letter to the ministers of finance and shipping and Greece’s Asset Development Fund, that it was not responsible for the delays.
Greece maintains veto on Cosco strategic decisions
The OLP master plan calls for €600 million in investments, of which half are the mandatory ones that should have been completed by this month. In fact, less than half, or €140 million, of the mandatory investments have been completed; the rest of the projects have either not been licensed or are delayed due to court challenges.
According to a report in Kathimerini, the new agreement calls for Cosco to post letters of guarantee covering 33 percent of the amount of pending investments. Also, the state gets a veto on strategic decisions, but will henceforth only be represented by one member on the 11-member OLP board of directors instead of three.
Cosco, one of the largest dry bulk shipping operators worldwide, plans to turn Greece’s Port of Piraeus into a main entry point for Chinese exports to Europe.
Chinese President Xi Jinping’s visiting Greece in 2019, toured the port just outside Athens with Greek Prime Minister Kyriakos Mitsotakis. While there he called Piraeus “the head of the dragon” for a new Beijing investment drive in the country.
In 2016, Cosco purchased a majority stake in the ancient port of Piraeus. Situated in the Saronic Gulf, Greece’s largest — and Europe’s seventh largest — harbor is in a very strategic location between the Asian and European continents.