Spaniards said to be pressing for greater control of DEPA

Spanish gas distributor Gas Natural, the sole firm to make a binding bid for a 35 percent interest in the Public Gas Corporation (DEPA), is pressing for an increase in its holding and a stronger participation in the firm’s management, sources said. The development seems to be increasing difficulties with the privatization, which ministers were initially said to expect to be relatively smooth. The government, which controls 65 percent of DEPA, has been hoping to raise about 300 million euros from the sale, part of a privatization program this autumn targeting 3 billion euros to pay off public debt. State-controlled oil refiner Hellenic Petroleum (ELPE) holds DEPA’s remaining 35 percent, while the country’s virtual power monopoly, the Public Power Corporation (PPC), retains an option to buy 30 percent from the government. The Finance Ministry has asked PPC not to exercise the option until the privatization sale has been completed. The amount which the Spanish company bid for the initial 35 percent stake offered has not been disclosed. But sources say it ranges between 260 and 285 million, depending on several terms, mostly linked to the buyer’s exposure to liability for the over 100 million euros demanded by the builder of DEPA’s network and other infrastructure. The case has been under international arbitration for over two years. According to the sources, Gas Natural is now pressing for a bigger stake and the management in DEPA, arguing that it faces the risk of being marginalized on important decisions, given the fact that the other two shareholders are public corporations ultimately bound to go along with the directives of their political masters. An additional stake for the Spaniards can either come from ELPE’s 35 percent interest or the 30 percent option reserved for PPC. The two public corporations, however, appear keen to retain their interest. ELPE in 2001 received compensation for giving up its right as the preferred buyer of an additional stake in DEPA and is now said to be interested in increasing rather than reducing its holding. A scenario being discussed is for the sale to be completed as planned while Gas Natural and ELPE conclude a commercial agreement also providing for joint management control. Sale adviser JP Morgan has invited representatives of the company to Athens next week for talks on the privatization. Talks The sources said Development Minister Akis Tsochadzopoulos is about to sign a decision settling the issue of a stable pricing policy for DEPA, which will largely determine the gains the Spaniards can expect from their investment. The talks are also projected to deal with the regulatory framework for the natural gas market and DEPA’s existing liabilities are likely to have a future bearing. Gas Natural has identified Greece as one of the countries it sees as important for its expansion abroad. At home, Gas Natural failed in its hostile takeover bid for power utility Iberdrola earlier this year. In bidding for the DEPA stake, Gas Natural accepted the company’s strategic plan, which involves bringing in natural gas from the Caspian Sea region via a pipeline from Turkey and providing Italy with part of that gas via an underwater pipeline still to be built.