Further sale of stakes in DEPA, HELPE soon

The further privatization of the Public Gas Corporation (DEPA) and Hellenic Petroleum (HELPE) will be completed after the Olympic Games, according to sources in the Economy and Finance Ministry. Negotiations for the sale of 35 percent of DEPA to Spain’s Gas Natural, from which the government hopes to raise 285 million euros, are making progress and a positive outcome is expected in the autumn. Senior officials said the Spanish proposal amounts to a large direct investment of the type sought by any European country. The same sources said HELPE’s desire for participation in the negotiations with the Spaniards is virtually a non-starter, as the goal is the opening up of the market and not the promotion of monopolies that would further tighten existing conditions. Further developments may be expected on the issue of the sale of 8.2 percent of HELPE, which recently became the property of the Public Portfolio Management Agency, after the maturing of a convertible bond. According to a dual proposal submitted by advising banks National and UBS, the government may either opt to sell the stake at a premium to the Latsis group, which has a 25 percent holding in HELPE, or offer it at a discount through public subscription. Besides taking a favorable view of privatizations, the government has an urgent need to raise money in view of mounting deficits and promised tax reductions. But in an interview with US magazine Institutional Investor (August 2004 issue), Economy and Finance Minister Giorgos Alogoskoufis suggested that the privatization program, to be introduced in the coming months, will not be promoted at any price. «We are aren’t too keen to sell our shares quickly at low prices just to help cover the fiscal deficit. It might even be better to borrow than to sell cheaply. So we will be cautious. We want to look at the management of firms that have been partially privatized before we proceed,» he said. HELPE results Low sales volumes and high operating costs dragged down HELPE’s half-year profits, despite the especially high profit margins of refineries worldwide. The group’s official statement, released yesterday, shows consolidated pretax profit at 130.6 million euros, the same level as in the first half of 2003. Actually, profit has been reduced by 15 million euros, the share of the Elefsina refinery (the former Petrola refinery) which was not included in the 2003 results, because the two companies had not merged yet. The group’s consolidated earnings before interest, taxes and asset depreciation (EBITDA) were 206.4 million euros, up 15.3 percent from the first half of 2003. This increase stems exclusively from the group’s refining activities, given the sector’s very high margins in the second quarter of 2004, which more than compensated for a 7.2 percent in volume sales of refinery products, to 8.3 million tons. HELPE management attributes the lower sales volume to lower demand among shipping companies, the Public Power Corporation – which has been substituting natural gas for oil – and the armed forces.

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