Greece to privatize port, airports in concession to creditors

Greece will continue with efforts to privatize the country’s largest port and regional airports as it seeks ways to attract investment for other state assets, Economy Minister George Stathakis said, in a government concession in talks with its creditors.

The privatization process that is already underway for the Piraeus Port Authority SA, operator of Greece’s largest harbor, and for 14 regional airports will continue, Stathakis said Thursday in an interview in Tbilisi, Georgia. “We’re trying to revise some elements of these privatizations in order to improve them and I think we’ll get a sensible agreement for both.”

A sale of the Piraeus Port would be a reversal on the part of Greece’s Syriza party-led government, which had earlier pledged to block such moves. As part of ongoing negotiations to unlock aid to Europe’s most-indebted nation, Greek’s European creditors have asked for more specific policy proposals in areas including labor market deregulation, a pension-system overhaul, sales tax reform and privatization of state-held assets. Still, Stathakis said the government doesn’t plan to sell other assets at the moment.

The Piraeus Port sale “is part of the bailout negotiations,” and the fact that the government “agrees to privatize the port is a compromise to creditors,” government spokesman Gabriel Sakellaridis told reporters in Athens today.

Fraport Venture

A venture led by Fraport AG won the right in November 2014 to use, operate and manage the 14 regional airports after it offered 1.2 billion euros ($1.4 billion) for 40 years and promised to pay an annual, guaranteed leasing fee of 22.9 million euros. Fraport also pledged to make 330 million euros in investments over the next four years. Greece is talking to Fraport and a decision should be reached “very soon.”

It’s “definite” that Greece won’t proceed with selling other state assets on a list that had been agreed on by the previous government such as water companies, the post office or Public Power Corp, Stathakis said. “We’re trying to work on a different model than privatizing to attract capital and investment such as for the country’s railways and other ports” and Greece is looking at “alternative options to 100 percent privatization.”

Real Estate

The sale of land at Hellenikon, site of Athens’s old airport that is Europe’s largest unused tract of urban real estate, “is an issue under discussion,” Stathakis said. A venture led-by Lamda Development last year agreed to buy the property for 915 million euros while also committing to spend 1.2 billion euros on infrastructure at the site.

Greece’s most indebted state is locked in talks with its creditors over the terms attached to its 240 billion-euro bailout. Uncertainty over the country’s future in the euro area has triggered a liquidity squeeze, which pulled the economy back into a double-dip recession.

“The negotiation process has gone well recently and an agreement can be reached in the next two-to-three weeks,” Stathakis said. “The gap between Greece and its creditors has been closed on most issues and while there are some areas of concern to do with the pension system and reform of value-added taxes, there are ways to bridge this difference and come to an agreement.

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