Privatization of ports lags under red tape, indecision

The development of Piraeus and other ports around the country is proving a lot more complicated than first imagined as delays, red tape, conflicting messages from officials and overall indecisiveness are beginning to put off serious investors. Meanwhile, no tangible decisions are expected before late February, by which time progress should have been made on the Attica Port System initiative after reports are submitted by the financial and legal advisers of the state privatization fund (TAIPED) as to the feasibility of the project.

At the same time, Chinese shipping giant Cosco, which has expressed keen interest in Piraeus Port and wants to safeguard its existing and sizable investment there, is owed some 32 million euros in value-added tax returns by the Greek state from the investment is has already completed. The issue has become a bone of contention with Beijing, as evidenced when Chinese Ambassador to Athens Du Qiwen recently emphasized the problems the company faces in terms of sluggish bureaucracy.

Also last month, Prime Minister Lucas Papademos met with TAIPED?s chief executive officer, Constantinos Mitropoulos, who, in turn, had already held meetings with the general secretaries and government officials concerned, among whom were Deputy Merchant Marine Minister Adonis Georgiadis and the general secretary of ports and port policy, Thanos Pallis.

According to the latter, the government and TAIPED are waiting for the assessments of its two advisers, Morgan Stanley and Piraeus Bank, which are expected in late February or early March. Their reports will determine whether it would be more profitable to sell just 23.1 percent of the shares of Piraeus Port Authority SA (which is already under the fund?s jurisdiction) or to wait for the completion of the Attica Port System (a merger of the Piraeus, Rafina, Lavrio and Elefsina port companies) and then sell a stake in the new company instead.

Another scenario that is not unlikely is for the entire company to be sold. Within this process, Piraeus Port Authority SA will also have to decide whether to split into separate regulatory and executive authorities and then whether to sell the latter while keeping the former. This strategy was adopted by Berlin for Hamburg port.

?We are pressing for the final reports of the advisers by end-February, but it is likely they will come in March,? said Pallis, who added that it is not unlikely Greece will have to renegotiate the terms of the privatization of its main ports with its creditors — the European Commission, the European Central Bank and the International Monetary Fund — that are currently demanding the sale of 23.1 percent of Piraeus by the end of 2011.

Furthermore, the likelihood of general elections in spring will complicate the time line even further, while more confusion has been added with a recent statement made by the managing director of Piraeus Port Authority, Giorgos Anomeritis, who said that 51 percent of the company would remain under the state?s control.

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