ECONOMY

Privatization program remains in search of direction

The government is trying to set a course in its privatization program, as the absence of a finance minister for some 10 days after the general election and the lack of a clear strategy have kept the sell-off schedule frozen, something which isn?t likely to change anytime soon.

According to the policy blueprint published last weekend, the three leaders of the parties in the coalition government were clearly in favor of the privatizations, although they did raise some questions about the way the program will be implemented and its extent.

The text refers to ?the state retaining ownership of networks and making the most of the system of concession contracts for main infrastructure.? At best, this reference entails the long-term concession for use of networks and infrastructure to private investors, while others see it as barring the privatization of major utilities such as gas grid operator DESFA, the Athens Water and Sewage Company (EYDAP) and Public Power Corporation (PPC).

Despite Prime Minister Antonis Samaras?s clear guidelines, government officials have been making statements that generate confusion, as each has a different strategy or position regarding the privatizations. The new deputy culture minister, Yiannis Ioannidis, who holds the sports portfolio, said his personal opinion was that state gaming company OPAP should not be privatized as it brings in considerable revenues every year. He added that it could only be sold if the buyer was prepared to pay 5 to 7 billion euros for the state?s stake.

Democratic Left MP Theodoros Margaritis appeared more in favor of the free market than New Democracy?s Ioannidis, stating that his party is open to an OPAP sell-off if it is conducted within an acceptable framework. However, he appeared to disapprove of any privatization related to domains of national interest, such as the energy and water sectors.

Such statements create confusion in the market and among potential buyers and show the absence of a clear strategy. This confusion is bound to heighten after Monday?s appeal by unions and local authorities to the country?s highest administrative court, the Council of State, against the transfer of state assets to the state privatization fund (TAIPED). That is also expected to stall the sell-off process further.

These issues will be at the focus of attention during the visit by the inspectors of Greece?s official creditors — collectively known as the troika — next week and their talks with the government. The representatives of the European Commission, the European Central Bank and the International Monetary Fund are set to press for more privatizations, against the Greek side?s intention to ask for fewer sell-offs.

It is true that the new government — and particularly New Democracy — is said to be trying to improve the impression the troika has received regarding privatizations by pushing for the completion of one or two in a short period of time.

To this end, the sale of the state?s stake in OPAP is possible as it does not constitute a strategic company, while a push for the concession of railway operations to the private sector is also likely. Both PASOK and Democratic Left are reported to be in favor of those moves, too.