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22ndannualcapital

June Heralds Privatization Rush

June is a month heralding a bevy of privatizations and concurrent investments, from which the government expects a lot to bolster the ailing economy.

June is a month heralding a bevy of privatizations and concurrent investments, from which the government expects a lot to bolster the ailing economy. June will be determinative for the fate of ports, airports, and energy concerns like DESFA and the so-called “small DEH.”

The main dates to look out for are 5 June when the call of interest for 67% of the Thessaloniki port authority deadlines; 10 June when state asset fund TAIPED will announce the six finalists for the bid for 67% of the Piraeus Port Authority (PPA); during the second third of June the relevant parliamentary committee will discuss the issue of the “small DEH”; 11 June there is a meeting between PPA management and COSCO; 14 June meeting of the PPA board; 16 June the president of Azerbaijan will visit Athens; 19 June will see Chinese premier Li Keqiang in Athens;

The Chinese delegation is eying the International airport at Iraklion, Crete, seeing a possible new gateway to Europe for products and passengers. At the same time, Fosun that has undertaken the management of the Athens International airport has already expressed an interest in acquiring part of the airport.

The big battle is expected to be given for the country's ports. COSCO, Danish giant Maersk, and US group Ports America Group Holding are vying for 67% of PPA. At the same time, COSCO wants the green light from the EU Commission to unlock the friendly arbitration with PPA in order to unlock 230 million euros worth of investments.

The thorn in the government's side is the bill to privatize the “small DEH.” The bill is sure to create flare ups in parliament, especially from deputies of power producing regions (Kozani, Florina, Drama, etc). In parallel, the energy ministry will have to finalize and bring to parliament the bill on natural gas retail sales, breaking the monopoly of local state retail agencies. This change will mean achieving agreements with investors in the three locals currently operating (Shell for Attica, and ENI fro Thessaloniki and Thessaly).

The energy sector is also going to be a field for intense competition with Chinese firm China State Grid is participating in the bid to buy 66% of electricity regulating authority ADMHE. The visit by the president of Azerbaijan on 16 June will focus on the privatization of gas company DESFA. Already a first certification given by the energy regulatory agency. A certification offered by the energy regulatory agency RAE is a first step in this direction.

The crucial hurdles are that the Commission approves the sale of DESFA to Socar are whether both companies are deemed to be operating under EU guidelines and regulations. So far, since last June when the competition finished to this day, next to no progress has been achieved on the EU side, heightening anxiety on the Azeri side. This may mean that the process will take another two months to conclude.