ECONOMY

Brussels agrees to allow aid for Skaramangas

The European Commission yesterday gave the green light to a portion of state aid granted to Hellenic Shipyards but said it would continue its probe into other measures deemed incompatible with the common market. The Greek government decided to grant aid to Hellenic in July 2001 as part of the privatization process. This included incentives tied to a voluntary redundancy program, future retirements costs, and tax benefits related to the shipyard’s past losses. Hellenic Shipyards, also known as Skaramangas, was sold to a consortium comprising German shipyard Howaldtswerke-Deutsche Werft (HDW) and German naval equipment company Ferrostaal last week, ending a contentious and protracted privatization process. The consortium paid 47.1 million euros for Hellenic, of which 41 million euros will go toward a capital increase at the shipyard. It is also committed to a 44-million-euro, five-year investment program to upgrade Hellenic. In its ruling yesterday, the Commission said it has decided to approve state aid amounting to 29.5 million euros to cover costs related to the early retirement of around 200 employees working in the civil shipbuilding section. While the grant is considered state aid, Brussels said it gave the green light because «the resulting capacity reduction is of a genuine and irreversible nature.» It said that Greece is committed to cutting Hellenic’s annual ship repair capacity to 420,000 man hours, for both direct employees and subcontractors, per year over the next 10 years. The move would slash capacity by 42 percent. The Commission was further won over by the Greek government’s promise not to increase Hellenic’s civil shipbuilding production capacity in the next decade. It said the limitation on capacity is «an adequate compensation for the aid involved.» Brussels, however, expressed concern over two other types of state aid, saying it needs to review the issue further. The first concerns future one-off payments for employees scheduled to retire. As this constitutes operating aid, it could violate common market regulations. Greece’s proposal to grant tax benefits to Hellenic because of old losses could also be interpreted as operating aid and thus «be incompatible with the common market,» the Commission said. While the Commission’s investigation has no bearing on HDW/Ferrostaal’s acquisition of Hellenic, objections raised by losing bidder Elefsis Shipyards with the European Competition Committee on the sale could put a spanner in the works. Last month, Elefsis took its protest to Brussels, claiming that the Greek government had favored the German bid and was also making illegal subsidies to Hellenic. Separately, Development Minister Akis Tsochadzopoulos said yesterday the State plans to ask the Hyatt-led consortium to raise its offer for the Mont Parnes casino. Hyatt and its partner, construction firm Hellenic Technodomiki, won the contest for a 49-percent stake in the casino last week with an offer of 92.1 million euros. The starting bid had been set at 80 million euros. Losing consortium Casino Attica, comprising the Loutraki casino, Piraeus Bank, several construction firms and a shipowner, however, claimed the contest had been dogged by irregularities and called for a rerun. It also said it was willing to offer more than 100 million euros for the Mont Parnes casino. Tsochadzopoulos said the privatization committee has asked Hellenic Tourist Properties, the asset management arm of the Greek National Tourist Organization, to «ensure a better offer» from the winning consortium. The successful bidder is entitled to take up an additional 2-percent stake in the Mont Parnes casino following the completion of its investment program. The casino complex includes two hotels on the premises.