Greece to privatise broad range of assets

With privatisation key term of Greece’s reform-for-aid package, Athens plans to privatise series of assets worth €50 billion to contribute to privatisation fund

Photo by: Reuters
Photo by: Reuters

A man waves goodbye as a ship departs from the port of Piraeus August 2, 2015

The Greek government is to sell off a wide range of valuable assets as part of its privatization plan mandated by the bailout.

Government stakes in the country's four largest banks could even be included in the sale, according to Greek media reports on Tuesday.

Ports, marinas, sewage companies, utilities, even a castle in Corfu are all up for grabs. The Greek government must raise €50 billion ($55.9 billion) with sales of assets for a fund that is intended to recapitalise Greek banks and to invest in key areas of the country's economy.

On Sunday the Greek government released the first phase of the plan, but the announcement triggered a confused reaction from the markets on Monday, as only nine assets were listed. This was a shorter list than the one published by the Hellenic Republic Asset Development Fund on July 30 that included 23 assets.

The regional airports, operations at the airport plot at Elliniko, the Astir Palace Resort at Vouliagmeni, state-owned land at Afandou on Rhodes, the gas transmission network operator DESFA, the Piraeus and Thessaloniki port authorities, the sale of two railway companies, the sale of Rosco, and shares in Athens International Airport were slated for privatisation in the plan.

Market professionals have complained about the failure to list all 23 assets, according to a report from the Greek newspaper Kathimerini.

There is concern, however, that the sale of assets may not raise as much funding as expected. The International Monetary Fund, in its review of the Greek debt plan in July, warned that the poor state of the global economy could lead to either a lack of offers for assets, or offers that are just too low.

Still, the offer of state-owned shares in Greece's four largest banks could be expected to generate considerable investor interest. The banks will be recapitalised as part of the bailout plan, with about €10 million already being paid out by separate bailout funds for this purpose and the banks control a large share of the Greek market.

It has also been reported that Azerbaijan’s state-owned energy company SOCAR is negotiating to acquire a stake in the Greek gas grid operator DESFA, with a deal possible by the end of the year.

SOCAR would reportedly acquire 66 percent of DESFA for about €400 million ($457 million).

Nonetheless, some economists have cast doubt on the Greek government's ability to make the privatisations work.

"The creditors forecast that revenues from privatization will amount to €50 billion over the course of the loan programme. This is hopelessly optimistic, given how wrong the troika’s previous forecasts were. The current projection is that they will raise less than €1 billion a year," wrote Christian Odendahl, of the Center for European Reform, in a note published on July 13.