ECONOMY

Seaports and airports are to be next up for privatization

The next privatization wave after the completion of the procedures for the port authorities of Piraeus and Thessaloniki will concern airports, as well as other seaports. Conditions are now more mature for updating regional airports (putting Athens International Airport aside). Soon the government will hire a consultant to examine alternative options and will recommend to Economy Minister Giorgos Alogoskoufis and Transport Minister Costis Hatzidakis the best way for the infrastructures’ best utilization. There are two alternative directions the government is considering: The first is for new companies to be created that would belong 100 percent to the state which will undertake either one (as in port authorities) or a package of more regional airports. The second concerns the state’s option to either float these companies on the stock market or seek a strategic investor to whom it would concede the management and a minority stake, or proceed with a public-private partnership by signing a concession agreement, with the contractor also undertaking the obligation to fund the development of infrastructure at the airport. This is mainly along the lines of the agreement made for Athens International Airport. In principle, the government has not ruled out any of those alternative options. An airport, such as that of Thessaloniki, could become a separate company by itself, or it could become part of a package along with other airports. «It will be down to the consultant to find out what is best in each case and what the market can take,» an Economy Ministry official said. Alogoskoufis, though, has clearly voiced his preference for solutions with high added value for the economy. The Economy Ministry believes that the ports are a more complicated case. That’s because they serve a policy of sea transport that answers specific local needs, while developing various activities renders their inclusion in a package as more complicated. For instance, there are ports that have passenger traffic only and others that also have commercial activity. Consequently, the conditions are more mature now for ports to see a new round of privatizations within 2008 than for airports. The extension to the deadline for the submission of bids for the container station at the Piraeus Port Authority and the intention of Dubai Ports to withdraw from Greece’s biggest seaport to focus on the other tender for the station at Thessaloniki port have increased rumors that the tender may be bust. However, government officials seem optimistic that the tender will be completed normally. If it does and the capital gains from the entry of a major investor into the container station are reflected in its stock price, then the government is planning to concede part of the state’s stake through the stock exchange by the end of the year. In the medium term, there will also be fresh negotiations with German company Hochtief for the floatation of the company that operates Athens Airport. Negotiations will be very complicated, which leaves little optimism that the process will be concluded this year. The state owns 55 percent of Athens International Airport, Hochtief has 40.01 percent and Swedish company ABB the remaining 4.99 percent. The government wants between 25 percent and 35 percent to be traded on the stock market, with a simultaneous offering of shares by both main shareholders. The privatization of 51 percent of the Mont Parnes casino on Mount Parnitha has, for the time being, been put on ice, as has the extension of the exclusivity of existing casino permits. Although there was significant activity on the issue in end-2007, there has been no progress on a decision-making level. The privatization of the Mont Parnes casino is quite complex, as it must be preceded by a valuation process that must take into account a series of parameters. The extension process for permits has been frozen as the 12-year period has expired, while the rumors about the issuing of new permits has not been confirmed by the government at this stage. The only ongoing tender is that by the Tourism Development Company concerning the 100 percent privatization of the Corfu casino. This process is now at its second level of evaluation. Three companies, which are already active in the Greek market, have expressed interest in the casino. They are the owner of the Loutraki casino, that of the Thessaloniki casino (with a stake in the Mont Parnes) and the owner of the casinos in Xanthi and Rio.