Privatizations send the main signal

The investment community is awaiting clarification of the government?s intentions regarding the breadth of privatizations heralded by Prime Minister Antonis Samaras in his government?s policy program on Friday.

According to the plan, a large number of public assets will be sold in the coming months in an bid to reverse the negative investment climate. The government seems to have recognized that privatizations can serve as a basic lever for stemming the exodus of multinational capital, which has accelerated in the last two years.

Besides the assets which have already been processed by the privatizations authority (TAIPED) in recent months and are deemed mature, the list, which is expected to be announced in the next few weeks, is considered likely to include some less mature but more high-profile cases, such as Public Power Corporation (PPC) and the Hellenic Railways Organization?s (OSE) passenger services section (TRAINOSE). Ministers such as Costis Mousouroulis, who holds the merchant marine portfolio, seem keen to convey the message that privatizations will go ahead irrespective of reactions by opposition parties and trade unions. What remains to be seen is the breadth and depth of the sell-offs.

All indications suggest the list will include the six ?mature? sales of Hellenic State Lotteries, the Public Gas Corporation (DEPA) and Hellenic Gas Transmission System Operator (DESFA), the International Broadcasting Center, the old airport at Elleniko, the Afandou golf course on Rhodes and the Kassiopi area of Corfu, in addition to PPC and a part of heavy lossmaker OSE.

New Development Minister Costis Hatzidakis is expected to play a key role in the case of OSE, which he knows well, having served as transport minister in 2008.

OSE is not considered as attractive an asset for privatization as Olympic Airways was — when it was privatized under Hatzidakis?s watch — but it may become so if combined with other investments, including a connection with Piraeus.

As regards gaming firm OPAP, a profitable company, privatization concerns the sale of the 29 percent tranche owned by TAIPED. For PPC, meanwhile, the situation is rather confusing, given that the options included in the various revisions of the privatizations program have ranged from the sale of a 17 percent stake to that of power plants. A solution is also being sought for ATEbank, which is expected to be relatively high on the list. It will either be sold or merged with another bank, after it is rid of its loss-making subsidiaries. Such a scheme is conditional on the recapitalization of Greek banks. Tobacco industry SEKAP and Hellenic Sugar Industry (EBZ) are two of the aforementioned lossmaking ATEbank subsidiaries and efforts are expected to resume for their sale, although they are not considered privatizations per se.

The main package is also expected to include concession agreements for the Piraeus and Thessaloniki port authorities (OLP and OLTH), around 10 regional ports (including Igoumenitsa, Kavala and Iraklion) and a number of marinas.

Discussions regarding the breadth and depth of privatizations have already begun between representatives of the three parties that form the coalition government and will continue.

The sense of urgency within the government is strong because the main opposition SYRIZA party is certain to apply unrelenting pressure against the privatization program. The performance of the Athens bourse last week, however, shows that investors anticipate that the government is determined to move on the issue.

An additional factor of pressure on the government is that it wishes to use privatizations as a credential in its targeted renegotiation of the bailout program. New Finance Minister Yannis Stournaras said last week that the government cannot request a renegotiation before showing some progress in bringing the bailout program back on track.

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