Gov’t promises extra sell-off revenues

The new privatizations program that the government forwarded to the eurozone and the International Monetary Fund this week provides for extra revenues of nearly 2.5 billion euros in the three-year 2015-17 period.

Although the new program is less detailed than that submitted three weeks earlier, there are some significant amendments: The original plan had provided for the collection of just 3.9 billion euros, but now the government expects 6.3 billion. The new plan provides for the collection of 3.7 billion in 2016 alone.

Notably, the assets and figures included in the new proposal to the country’s creditors do not concern any other properties, such as banks and/or energy sector enterprises. Furthermore, there has never been a single year with revenues of more than 1 billion euros since the start of the privatizations program in 2011. Only in 2011 and 2013 did annual revenues come close to 1 billion, mainly thanks to the sale of assets related to OPAP gaming company.

The government’s latest proposal refers to the development and utilization of the old Athens airport plot at Elliniko by its name. That had been a taboo issue until recently for the ruling SYRIZA party, but while its inclusion in the program certainly boosts anticipated revenues, it does not suffice to justify the 2.5-billion-euro increase alone.

Elliniko may have an agreed price of 900 million euros, but it cannot bring in any more than 300 million euros in revenues to the state in the first three years. Therefore, either the government will need to seek new assets to add to its privatizations program (such as real estate properties etc) or it expects more revenues from the same assets that are up for utilization.

If the latter is the case, it is seen as a long shot, given that, besides the macroeconomic risk, the interested investors (Fraport, Emma Delta, Lamda Development, Jermyn Street Real Estate Fund etc) face long delays in their preferred projects. For instance, the shareholders of Fraport, which has bid for Greece’s 14 regional airports, have criticized its management for keeping funds committed for its planned investment in Greece that keeps being delayed.