First real signs of Greece's privatisation drive emerge

02/10/2012

Grand proclamations of a comprehensive privatisation programme are finally showing signs of implementation, nearly three years into a devastating debt and economic crisis plaguing the east Mediterranean country.

By HK Tzanis for Southeast European Times in Athens -- 02/10/12

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Athens announced that it will sell 33 percent of its holdings in OPAP, the state-run listed operator of lottery games and betting pools in the country. [Jamie Adams]

The original figure of 50 billion euros in proceeds from privatisations in Greece, first uttered in February 2011 by EC-ECB-IMF Troika officials representing Greece's institutional creditors, was quickly abandoned due to foot-dragging by then Prime Minister George Papandreou's government before it imploded in November 2011.

Subsequent political instability and two general elections -- in May and June -- eventually produced the three-party-backed government of Prime Minister Antonis Samaras, which has repeatedly promised to fulfill, at least partially, the privatisation target.

Greek Finance Minister Yannis Stournaras, the most influential and closely watched member of Samaras' cabinet, said that September will see the privatisation drive swing into full gear, "offering a sign of the government's will to rapidly implement this privatisation programme."

The Troika wants Greece to sell or lease state entities and properties to raise 19 billion euros, or $24.48 billion by 2015 in return for continued welfare aid, but many analysts said out the country's miserable track record so far and doubt privatization will be a panacea.

Aggelos Tsakanikas, head of Research at the Athens-based Foundation for Economic and Industrial Research, said delays because of two elections and a summer break brought privatisation to a halt and it will be tough to regain momentum.

"It's not only the value that you can get from the initial monies but how much money will be invested in them," the newly-privatized companies, he told SETimes.

"I don't think we will see such big numbers but we need to put the pressure on investors because we need not only money but jobs. Privatisation is another fiscal instrument we can use instead of just reducing wages and pensions," he added. "We will see some significant progress in the next couple of months."

On Thursday (September 27th), the Greek government announced that it will sell 33 percent of its 34 percent holdings in OPAP, the state-run listed operator of lottery games and betting pools in the country.

According to a finance ministry draft law, the state will collect up to 30 percent of OPAP's annual gross earnings until 2020, while the tax rate on OPAP games will be set at 10 percent.

The company is currently worth 450 million euros on the Athens bourse, and the sale is expected to bring in about 19 million euros to state coffers.

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A plan by Mumtaz Tahincioglu, the president of the Turkish Motorsports Federation, would construct a F1 racetrack in Greece. [Reuters]

"The fact that OPAP is being completely sold off shows the government's will to privatise," Dimitris Mardas, an economics professor at Thessaloniki's Aristotle University, was quoted by Reuters as saying.

On a regional level, at least two high-profile projects feature investments by Turkish companies.

A Greek-Turkish consortium, comprised of the Folli Follie group and Turkey's Setur Servis Turistik -- a subsidiary of the massive Koc group, is rapidly developing the marina of Mytilene, the capital of the Aegean island of Lesvos, after a successful bid for the marina's concession in early 2012 -- worth 250,000 euros a year for a 40-year lease.

The two partners, both operators of airport duty free concessions, first interacted as competitors, during a tender for duty free shops in Turkish airports.

The consortium will reportedly bid for another two marinas in Greece, one on the eastern Aegean island of Hios and another on the Ionian island of Cephallonia.

"It is correct that the [tourism] sector has been affected by the crisis, but we have a long-term perspective. I believe that the tourism sector will advance as time passes … If this co-operation is successful, then the road to other investments will be open," Ibraham Tamer Hasimoglu, the president of Koc Holding's tourism, food and retailing group, told SETimes.

In addition, the headline-grabbing prospect of a Formula 1 racetrack and assorted high-end tourism infrastructure on a now mostly disused industrial district west of the port of Piraeus generated even more media attention when Mumtaz Tahincioglu, the president of the Turkish Motorsports Federation, visited Greece this month.

The Turkish businessman and racer met with municipal officials and the head of a local consortium to promote the investment.

According to the plan, which is supported by the municipalities that own the harbor-side property, the cost to construct and guarantee the holding of F1 Grand Prix would be around 650 million euros.

"At this decisive juncture for Greece every event that might make our country known abroad and draw international interest is welcome and must be supported," deputy minister for education and sport Costas Tzavaras said in a recent statement.

"The prospect of a Formula One race at Drapetsona creates expectations for the revaluation of our tourism sector through the regeneration of the area. At the same time it will help create new jobs and promote our country's image overseas."

The unprecedented efforts to commercially exploit the Greek state's vast but untapped property holdings on a corporate level come amid several international press reports claiming the sale or long-term lease of several pricey holdings, including the former royal country estate of Tatoi, just north of Athens.

According to Businessweek, which quoted an unnamed government official, other would-be properties up for sale include a residence in west London used by high-ranking Greek diplomats, an eight-storey office building in Brussels, a Baroque-style building in downtown Belgrade, offices in Ljubljana and a two-acre property in Nicosia.

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The privatisation fund approved a tender to sell the natural gas provider DEPA. [Natural Gas Europe]

In the energy sector, the privatisation fund approved a tender to sell the natural gas provider, DEPA, and the affiliated gas transmission system operator. The state's roughly 30-percent share in the Hellenic Petroleum group, amongst the largest in Southeast Europe, is also on the selling block.

Haralambos Tsardanidis, director of the Institute of International Relations in Athens, said the climate is still difficult in Greece to lure investors, even with the prospect of bargain basement sales and with buyers knowing the country is desperate for cash.

"The Troika has diminished how much it thinks can come in from privatization and with a recession it's not so easy," he told SETimes.

Samaras still has to convince the Troika to accept an 11.5 billion euros budget cut blueprint needed to release a 31.1 billion euros loan tranche and a second bailout of 130 billion euros. "It's going to be tough for privatization if there is no next installment," Tsardanidis added.

So far, the government has put forth only 40 uninhabited islands for sale or lease, and one-third of the sports betting and gambling agency, OPAP, which showed net revenues of 126.1 million euros in the first quarter of the year.

Miranda Xafa, the former Greek representative on the board of the IMF, said that although the "target" figure from privatisations has again fallen for 2012, any amount of revenue will plug borrowing needs.

"The major goal is to attract investments and to create jobs, it's not just the money ... So far [the privatisation drive] has been very disappointing," she told the SETimes.

But how do Greeks feel about sell off their country's assets?

An opinion poll last year on the issue of privatisations by Public Issue poll showed that 74 percent of respondents said the measure was "definitely" or "probably" necessary.

About 58 percent expressed a positive view of the sell-offs; While 69 percent of respondents said the private sector must be reinforced if Greece were to return to growth.

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But not all agree.

Costa Vlachopoulos, 63, a retired civil servant, said he thinks Greece is being short-sighted by getting rid of state-run entities and properties, even if many are big money-losers.

"Look what we've come to, it's like selling family heirlooms and you can never get them back and they're just putting money in a different pocket," he told SETimes.

SETimes correspondent Andy Dabilis in Athens contributed to this report.

This content was commissioned for SETimes.com.
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