An agreement signed by the Finance Ministry and the Municipality of Zacharo in southern Greece has paved the way for building activity to take place on fire-ravaged parts of the coastal district, according to a document seen by Kathimerini.

The agreement, signed by the Finance Ministry-controlled Public Real Estate Corporation (KED) and the Zacharo Municipality in the Ileia region legalizes hundreds of buildings that have been illegally constructed on coastal areas on the grounds that it will help to support the local economy.

The developers will able allowed to make use of the land for up to 69 years.

Sources said the decision to legalize the commercial activity is expected to come at a huge cost to the sensitive ecosystem in the area, a district that is protected by the European Union's Natura program.

Natura 2000 is an ecological network within the EU designed to protect the most seriously threatened habitats and species across Europe.

Infringements could result in the country facing legal action and penalties.

The agreement is in reference to five municipality-owned lots of land that cover some 250 hectares, stretching over what is considered to be valuable beachfront property.

The agreement allows development in the area to take place in two phases.

During the first phase, small snack bars will be allowed to be set up business in prefabricated buildings after taking part in a tender process.

The second phase will permit the construction of tourist and recreational facilities such as hotels and campgrounds.

Of the total revenues to be earned from the commercial development of the district, the local municipality will take 75 percent, with the remainder going to the Finance Ministry.