ECONOMY

Shipyard sale hangs in the balance after late demands

The completion of the sale of Hellenic Shipyards to the German consortium of Howaldtswerke Deutsche Werft and Ferrostaal will depend on how far the government is willing to concede to demands by the grouping that depart from the terms of the tender relating to the sale of the Greek facility. Even though Prime Minister Costas Simitis has said that Hellenic Shipyards, also known as Skaramangas Shipyards, has already been sold and that the transfer to the German consortium only needs the approval of the European Union Competition Committee, Kathimerini has obtained a copy of the official document submitted by HDW/Ferrostaal. The paper proves that the sale is far from final and that the outcome depends on how the State will yield to the German grouping’s demands. The tragedy is that the ground for these claims has been laid by the government, which wanted to absolve itself from past mistakes related to the cost overruns of submarine projects awarded to the German shipyard. Because of this, it subsequently restricted the privatization process of Hellenic Shipyards to HDW/Ferrostaal and at the same time prevented other candidates from France, the Netherlands and the UK from getting access to details of the submarine projects. The consequence of the government’s action is that it is now being urged by HDW/Ferrostaal to modify three basic conditions which are tied to the completion of the sale of Hellenic Shipyards. The German consortium had originally submitted these requests along with their bid, but withdrew them later in order to win the tender. The April 29 fax, which was sent by HDW/Ferrostaal to the ministries of Finance and Development, urged the Greek government to «support the necessary measures needed for the submarine modification project as well as the option for an additional submarine.» It also set out three conditions prior to signing the contract for Hellenic Shipyards on May 13 as planned by the Greek government. The first was that the Finance and Development ministries sign and accept the losses incurred by the shipyard; the second condition was that the Finance Ministry approve the interest for payment of the sale price. Sources said the German consortium wants to jack up the interest rate to 5.75 percent from 5.25. The third condition was that the Finance Ministry put pressure on the Hellenic Railways Organization (OSE) and the Athens-Piraeus Electric Railways so that Hellenic Shipyards would not be penalized for delays relating to the construction of wagons for them. This shows that the German consortium did not withdraw their demands as the government had announced. Instead, under the pressure of the PASOK party congress last October, the government’s strategy effectively had been «sign now and we will work out the details later.» This stand substantially weakened its negotiating power to the extent that the State is now called upon to take over losses worth more than 205 million euros and also to fund the shipyard’s voluntary redundancy program with costs of more than 73 million euros. It will also have to bear the costs arising from the delays of projects for the navy and OSE, estimated at over 293 million euros. ECB staff go through strict assessment procedures every year, but no one is wary of this.