Gov’t warning on Elliniko offer

By Vangelis Mandravelis

The tug of war over the concession of the Elliniko plot development in southern Athens has started, with the government stating that Lamda Development will have to submit a financial offer equivalent to the value of the project to be conceded in order for its bid to be accepted.

Deputy Development Minister Notis Mitarakis issued a statement on Thursday in which he described the technical offer for the development of the plot that once accommodated the capital’s old airport as significant.

“After almost 15 years of inactivity, it is particularly important that there is a significant technical offer for Elliniko,” Mitarakis stated, adding: “To make it clear, we have been saying from the start that the offer will need to reflect the value of the concession. Decisions will be made with the state’s interest in mind.”

It is clear that Lamda Development’s first bid has not satisfied the government as there is a difference of about 200 million euros between the money offered and the amount expected by the seller of the Elliniko SA company, which was formed by the state for the development and utilization of the plot.

Lamda is said to have offered 600 million euros, while state privatization fund TAIPED is reportedly asking for 800 million. Lamda is expected to add to its offer the cost of the development of infrastructure – i.e. roads, squares, networks etc – estimated at over 1 billion euros, and as a result will describe the investment as totaling 2 billion euros or more.

This gap of 200 million euros is not negligible, but it can be bridged. Over 10 years it breaks down to 20 million euros per annum, which will not be a significant burden for investors determined to spend 6 to 7 billion euros in the next decade, even if that makes the project somewhat more expensive.