China’s largest bulk shipper Cosco Holdings Co Ltd has agreed a multimillion-euro expansion of its container operations at Greece’s biggest port Piraeus (OLP), easing the way for the port’s privatization.
Under a deal announced by Greek officials on Monday, Cosco will be excused paying fees to OLP in return for making the investment, removing a question mark over growth at the port and taking the state a step closer to selling its 74 percent stake. In turn this could add impetus to Greece’s ailing sell-off program, which has been hampered by the wariness of international investors to buy assets in the recession-hit country but which remains vital if Greece is to keep receiving bailout funds and debt relief from its international lenders.
Cosco took over management of OLP’s container port in 2008.
Under the terms of the agreement, Cosco will spend 230 million euros to increase Piraeus’s cargo handling capacity by two-thirds over the next seven years to an annual 6.2 million 20-foot equivalent units (TEUs).
In exchange, the deal suspends the fixed guaranteed fees Cosco was contractually obliged to pay to OLP, until Greece’s gross domestic product returns to its pre-crisis level of 2008, “plus 2 percent each year.”
According to Greek GDP forecasts, this concession effectively suspends Cosco’s payments until after 2020, saving the Chinese company at least 250 million euros.