Is the DESFA deal set to crumble?

Both Azeri firm Socar and the Greek government appeared calm and collected on Thursday following the European Commission’s announcement on Wednesday that it would subject the transfer of a 66 percent in Greece’s DESFA to the Azeri company to an in-depth examination, but the truth is that the privatization of the Greek gas grid firm is reverting to its starting point.

Seventeen months after the completion of the tender for the sale of the controlling stake in the country’s natural gas transmission network operator, the decision by the European Union’s Directorate General for Competition to examine whether Socar’s entry into DESFA would allow it to abuse the Greek system operator’s position in its own interest in effect reverses the course of the privatization and raises serious questions over its final outcome.

The Energy Ministry and state sell-off fund TAIPED played down the development, attributing it to Brussels’s regular tactics where large-scale takeovers are concerned, while Socar retained a cool demeanor in a statement on Thursday that saw the Azeri firm expecting the completion of the transaction.

Since the tender’s completion in June 2013, the aforementioned is the only issue to have been raised by the Commission in its contacts with the Greek and Azeri sides, as the fact is that there has been no precedent of a company from a third country with vertical operations (from production down to transmission and retail) having gained control of the energy infrastructure of an EU member state.

For all its intentions of approving the takeover, the Commission is bound by a directive that renders such a transaction virtually impossible, as some people say it was created in order to prevent the penetration of Russian energy giant Gazprom in the bloc.

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