NEWS

Utilities face major shake-up

The government is poised to replace at least 20 chairmen or managing directors of public utilities in order to improve the companies’ performance, according to inside sources. There will also be many changes in almost all 55 companies’ boards of directors, the sources said. Recommendations have already been sent to the office of Prime Minister Costas Karamanlis to await his final decision. The 55 state-owned utilities, almost all loss-making, cost at least 1.2 billion euros annually to the state budget, more if the state has to cover their loan defaults. The state acts as a guarantor for the public utilities when they take out loans. According to a law passed late last year, utilities have until June 30, this Saturday, to submit new company charters and business plans. They also had to limit pay increases this year to 3 percent, under threat of the state ceasing to guarantee their loans. So far, and despite government announcements to the contrary, pay raises have exceeded the original limit in several utilities and many have not yet submitted their business plans. Traditionally, utilities have been used, and abused, to curry political favors, especially by often appointing unqualified people to satisfy voters. This and other abuses have led many to financial straits. The utilities carrying the heaviest deficits include Hellenic Aerospace, Hellenic Defense Systems, Hellenic Railways and the Athens Urban Transport Organization. Despite their financial woes, government officials are optimistic there is plenty of room for improvement. Reforming public utilities has been high on Karamanlis’s agenda. Not all ministers, however, have been as enthusiastic, including the PM’s cousin, Transport Minister Michalis Liapis.