Elections stall privatizations; Gas Natural to delay DEPA purchase

Greece vowed to kick-start its stalled privatization drive in 2004 with a new round of sell-offs, but investor caution ahead of elections in March has put major deals onto the back burner until after the polls. Greece topped its 3-billion-euro privatization revenue target in 2003 and set an equally ambitious goal for 2004, with state asset sales seen as key to reducing whopping public debt. But after almost four months of talks, Spanish gas company Gas Natural said yesterday it was discussing with the Greek government a delay in its purchase of a 35 percent stake in Greece’s dominant gas company DEPA until after the vote. «The logical thing would be to wait for a new government,» Gas Natural Chairman Antonio Brufau told journalists. The main sticking point in the deal, estimated to be worth around 250 million euros ($314 million) is Gas Natural’s request for guarantees that the operating framework will not change. But the opposition conservatives, which lead the ruling Socialists in opinion polls ahead of the March 7 election, have criticized the sale plan as it stands now. A senior Finance Ministry source said on Wednesday that a partial flotation of a public tourist property manager ETA and a sale of a 2 percent stake in Greece’s biggest bank, National Bank, to a public social security fund were earmarked for February. The two sales could raise up to 300 million euros, but other long-awaited deals, like the sale of Olympic Airlines, the successor to heavily indebted Olympic Airways, are unlikely to materialize before the polls. Talks with potential investors over the airline are continuing but could be suspended, the official said. «I don’t know if we will have a political decision to freeze the process of privatizations ahead of the elections on March 7,» he added. Analysts said Prime Minister Costas Simitis’s decision to call the elections ahead of a May deadline and step down as his PASOK party’s leader may have thrown some more complex deals off schedule. «The government didn’t have much time to begin with, and then there were a few hiccups in the procedures. But they also had stormy political developments at the start of the year and maybe were hesitant to proceed with the privatizations,» said Vassilis Vlastarakis at Contalexis Securities. PASOK has long trailed the opposition, but with popular Foreign Minister George Papandreou set to take over the party leadership, the vote could be a close call, recent surveys show. Some analysts believe that officials, mindful of staff protests that accompanied recent sell-offs, will want to play it safe and avoid controversy six weeks ahead of the vote. The government has also yet to give dates for two sales announced last October, of a 20 percent stake in the Athens water utility company (EYDAP) and of a 35 percent chunk of state-owned Postal Savings Bank. Staff at Postal Savings have since protested against a deal, valued at 1.4-1.7 billion euros.

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