Sell-off projects to proceed despite obstacles

Despite growing political and legal complications resulting from the recent elections as well as decisions by the Council of State, the privatizations project is set to continue, state sell-off fund TAIPED has said.

This comes in the aftermath of the leftist SYRIZA party’s emergence as the strongest party in the European Parliament elections and the decision on the Athens Water Supply & Sewage Company (EYDAP) by the Council of State (CoS), the country’s highest administrative court. The transfer of EYDAP’s 34 percent stake from the state to TAIPED will now be reversed, as there are no options for another court battle on the matter. The decision concerns the second stake transferred from the state to the fund, completed in April 2012. The first had concerned a 27 percent stake conducted in 2011 as soon as TAIPED was set up.

Fund officials note that the verdict will have to be carefully examined by TAIPED’s legal service, which is yet to happen. They stress the decision’s complexity, given that it ruled against the transfer of the 34 percent stake, but actually referred to a majority stake (51 percent).

The CoS decision will also affect the privatization of Public Power Corporation (PPC). However it will not affect the sell-off projects that are already under way, concerning the Piraeus and Thessaloniki port authorities, which are continuing unhindered. Nor will it have any bearing on the development of the old Athens airport plot at Elliniko as the CoS has rejected the cases brought by local authorities and citizens.

There hasn’t been any impact on the privatizations of the former Hellenic Railways Organization (OSE) group, the regional airports or Athens International Airport (AIA) either. TAIPED’s management is about to request that Canadian company PSP, a major stakeholder in AIA, provide it with information on the fund’s plans about the further utilization of the airport company. TAIPED intends to proceed to an international tender for the sale of AIA shares, with potential buyers having two options: The first regards the sale of shares without an extension on the duration of the concession contract, and the second with a extension, as the existing contract expires in 2026.

There is no doubt of course that the election result will complicate the already troubled privatization process, but this could only be temporary, TAIPED officials estimate. They note that the political will for sell-offs to proceed remains intact, as the case of the Thessaloniki Port Authority has shown. In that case the TAIPED board wanted the issue to freeze after its negative reception in Parliament. However the government and the fund’s council of experts insisted on proceeding with the tender given that it constituted a prior action for the disbursement of the 8.5-billion-euro bailout tranche.

The council of experts has also asked for a new valuation of the lease for the Markopoulo Racing Course in eastern Attica in the context of horse-racing organization ODIE’s privatization. This is the lease that the preferred bidder will pay after the tender for the concession of the license to organize racing betting.

TAIPED hired an independent consultant to calculate the lease rate for the racing course. The consultant estimated it at 6 million euros per year, but that was deemed too much for investors to pay, as the licensee would effectively have to pay all of the revenues to the owner of the course – i.e. the Greek state that would be the recipient of the course’s ownership after ODIE’s liquidation. Now TAIPED has seen to the hiring of another consultant, who will also take into account the fact that ODIE’s privatization will take place without the company ceasing operations.

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