State sell-offs stay on course

The government is confident it will meet its privatization goals for 2009 despite the financial crisis having rattled markets across the globe. The Economy and Finance Ministry is aiming to raise 1 billion euros this year to trim the public debt, the second highest in the eurozone after Italy. This goal was seen by many earlier this year as unachievable due to the credit crisis and record low investor sentiment. However, the recent sale of a 5 percent stake in OTE to Deutsche Telekom for 674 million euros, plus the divestment of loss-making Olympic Airlines for about 67 million euros to Marfin Investment Group, have put the government on course to attain its goals. We are optimistic about the full-year target, said one ministry source. Another planned sell-off likely to be completed shortly is the sale of a 23 percent stake in Thessaloniki Water and Sewerage Company (EYATH) for an estimated 60 million euros while the sale of two scratch-ticket lottery licences may be worth up to 500 million euros to the state, according to some press reports. The ambitious privatization agenda, however, has suffered setbacks during the year. In July, the government pushed back plans to sell stakes in natural gas monopoly DEPA and Athens International Airport to 2010, citing complications and adverse market conditions. The most recent development has been the Economy Ministry’s appointment of advisers to find a strategic investor for state-controlled Phosphoric Fertilizers Industry (PFI). Investment bank Rothschild has taken on the search for a strategic investor in PFI, a producer of fertilizers and other chemical products. The government does not have a direct stake in PFI, which has a plant in Thessaloniki and Kavala and is facing intense competition from cheaper Chinese imports. DEPA holds 33 percent of the company while an additional 15.8 percent and 7.8 percent is held by Emporiki and National banks respectively.