TAIPED tries to lure EU firms back to DEPA-DESFA tenders

The tender for the privatization of Greece’s two main gas companies has drawn considerable interest in recent weeks, with increased activity not only on a business level but also on a diplomatic one.

Western European companies are reassessing the potential investment in Public Gas Corporation (DEPA) and gas transmission network operator DESFA after their interest was rekindled with the opening last month of a window of opportunity for bidders who had taken part in the first phase of the tender without continuing later.

The state privatization fund (TAIPED), which has stated its intention to grant the tender to the highest bidder, has reportedly asked Russia’s Negusneft – which has offered 1.9 billion euros for both companies – to provide a letter of guarantee for a significant amount, which would allow the fund to ask for improved offers from other candidate buyers in case the Russian bidder pulls out.

The target therefore is at this stage to once more attract the interest of major European companies, namely Enagas and Gaz Natural from Spain, Vopak from the Netherlands and above all ENI and Edison from Italy.

What TAIPED did to let them back into the race was to allow initial bidders to return to the tender by setting up a consortium with the candidates that have stayed on in the tender. These are Russia’s Negusneft and Gazprom (that has bid for DEPA only), the M+M consortium of the Vardinoyiannis and Mytilineos groups (for DEPA), the consortium of Czech fund PPF with GEK-TERNA (only for DESFA), and Azeri state firm Socar (for DESFA).

TAIPED’s decision may change the landscape in the tender, which has so far seen Gazprom and Negusneft emerge as favorites. This has generates worries in Europe and the United States regarding the scope of Russia’s influence in Southeast Europe, following the discovery of new hydrocarbon reserves.

Geopolitically, things could be simplified either by an alliance between Gazprom and a western European firm or by the creation of a new consortium that would overturn Gazprom’s advantage.

Greek government officials do not consider the former possibility likely, though Electricite de France, which controls Edison, as well as ENI, have allied with Gazprom in major projects in the past. They say that Gazprom is entering the tender with a major offer of 900 million euros for DEPA and has no reason to forge an alliance. Instead, the creation of another strong pillar is more likely, in cooperation with the Vardinoyiannis-Mytilineos consortium, which has recently intensified its contacts with European companies.

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