Country for Sale

Greek Privatization Chief Predicts Bonanza

Greece could become “an El Dorado for investors” as it moves decisively to sell off infrastructure assets, the new head of the country’s Privatization agency has said.

CNBC,

18 September, 2012

Takis Athanasopoulos expects the disposal of DEPA, the state natural gas utility, and its sister company DESFA, a gas distributor, to stimulate a drive to raise 19 billion euros ($24.88 billion) by the end of 2015, as agreed with Greece’s international creditors.

Mr. Athanasopoulos is confident he can pull off the landmark energy sale by early next year, opening the way for a series of infrastructure deals that would also create thousands of jobs to promote economic recovery.

“From now on, we should expect sharp criticism if we fail to deliver... The prime minister and our [European] partners are pressing hard for the process to move ahead,” Mr. Athanasopoulos said in a Financial Times interview.

“If we can change the psychology, Greece could become an El Dorado for investors. Our advantage is that the country isn’t saturated in any sector – especially tourism.”

Greece last year undertook to raise 50 billion euros from privatization's over the next decade as part of a medium-term reform program agreed with international lenders, but proceeds from asset sales so far have been modest in the face of opposition from unions, lawmakers and civil servants.

The Privatization agency’s last boss resigned in July, claiming investors were losing confidence in the country’s commitment to the program of disposals.

Mr. Athanasopoulos, a former vice-president of Toyota Motors’ European division, took over last month as president of the Hellenic Republic Asset Development Fund, or TAIPED, ending a four-month freeze on decision-making by the agency’s previous board of directors while Greece held two general elections.

Fourteen natural gas operators have already qualified as bidders for DEPA and DESFA, among them international groups such as Eni and Edison, Mitsui of Japan and Russia’s Gazprom, Greece’s main supplier of natural gas.

“We expect four or five companies to reach the final stage and to conclude a deal by the end of January,” said Mr. Athanasopoulos.

He declined to reveal a price target for the natural gas deal, but said Greece needed to be pragmatic about asset prices, given an unprecedented five-year recession and investors’ concern over whether the country will remain in the euro zone.

“It’s not the best of times for Greece... We have to get over this syndrome of unease about how long this recession will go on for; how long the country will remain in limbo [over the euro zone],” he said.

With one in four Greeks unemployed, creating jobs through commitments to future investment by asset purchasers has become more important than revenues from sales of state-controlled companies and long leases on state infrastructure assets. The finance ministry has announced that it wants to attract three euros of investment for every euro of Privatization income.

Mr. Athanasopoulos is trying an innovative approach to overcoming dozens of regulatory and administrative obstacles that discouraged potential investors during previous Privatization efforts – making a written agreement with each ministry involved in the process. He said: “Each list of measures that have to be taken is included in the ministry’s business plan, and can be referred directly to the prime minister.”

TAIPED’s portfolio includes several Greek utilities listed on the Athens stock exchange and hundreds of buildings and plots of land, including some prime coastal sites. It is adding 12 ports with potential for commercial or tourist development, including facilities on the islands of Corfu and Crete that could become hubs for cruise ship operators, and about 20 regional airports that could be upgraded to handle charter flights year-round.

However, Mr. Athanasopoulos concedes that only two deals are likely to be wrapped up this year: the sale of a 90-year lease on the former Olympic international broadcasting center, now a shopping mall with space for building entertainment facilities; and the disposal of the Hellenic State Lottery. The two privatization's would together raise a modest 300 million euros.

The biggest test for Mr. Athanasopoulos will be to push through the sale of a company set up to develop Hellenikon, the sprawling coastal site of the former Athens international airport.

Abandoned for almost a decade, apart from briefly hosting a few sports venues for the 2004 Athens Olympics, the site is seen by planners as potentially the largest urban regeneration project in Europe. But its scale, with costs estimated at 6 billion-10 billion euros, makes it a daunting prospect, even for big international property developers.

Four bidders – Qatari Diari Real Estate Investment, London & Regional Properties based in the UK, Elbit Systems of Israel and Greece’s Lamda Development – are participating in the second phase of the tender, due to be completed in 2013.

“This would be a long-term project, to be developed in several phases, that would make a real contribution to restoring growth,” said Mr. Athanasopoulos