Ports require urgent upgrades

Costs, estimated at over 2.5 bln, require infusion of private capital in return for sale of some services

By Nikos Bardounias - Kathimerini

The government has staked a great deal on attracting foreign investment to modernize the country’s ports and upgrade their services, hoping not only to improve their competitiveness but also to create jobs.

Most major Greek ports, such as Piraeus, Thessaloniki, Igoumenitsa, Iraklion, Corfu and Alexandroupolis can become important transit points for goods headed to the Black Sea, the Balkans, Central Europe and North Africa. It is estimated that container traffic in the area will triple within the next decade. That prospect has heightened the interest of big international cargo transport and port services firms in investing in Greece.

In order for Greek ports to be able to handle the steep increase in cargo traffic, they will need to upgrade their facilities and services. For the former, an investment program worth –2.5 billion is needed over the next five to seven years, experts agree. Of these, –1 billion will be spent on the Piraeus port and –300 million on the Thessaloniki port. This scale of investment can only be achieved with the help of the private sector.

Implementing a policy of calling upon private operators to undertake part of a port’s services in return for investment in infrastructure is considered necessary for the following four reasons:

First, international experience has shown that the management of port services by private firms has improved competitiveness and infrastructure and has created jobs. Already, such companies have undertaken the management of terminals or specific activities at 150 major ports across the world. In Europe alone, the top four global operators control 35 terminals, many competitive with Piraeus. For example, tasks that take 3-7 hours to complete at the port of Piraeus can be done in 10 minutes.

Second, it is estimated that foreign investment in Greek ports will add over 2,500 new jobs.

Third, the government’s plans do not endanger any jobs. On the contrary, these jobs will be upgraded and the existing personnel’s know-how and experience will be invaluable to any investor.

Fourth, the upgrade of ports may help to attract a sizable chunk of the $200 billion in cash in the hands of Greek shipowners.

Among the international companies interested in Greek ports are China’s COSCO and Hutchison Ports, Dubai Ports, APM Terminal – a subsidiary of AP Moller Maersk – and Israel’s ZIM.

COSCO and Hutchison Ports are, according to sources, considering forming a consortium that will bid to acquire the terminals in Thessaloniki and Piraeus.

APM Terminal is said to have focused its interest in Thessaloniki, where it has proposed sharing the costs of expanding the commercial terminal with the state.