PPC, OTE, ELPE stakes must go for gov’t to meet sell-off target

Only by selling its holdings in major listed companies such as OTE telecom, Hellenic Petroleum (ELPE) and Public Power Corporation, can Greece’s privatizations program meet the targets agreed with the country’s creditors.

Greece’s bailout deal provides for revenues of 4.5 billion euros from the utilization of state assets by end-2018 and the disappointing pace of progress on that front will certainly form part of the agenda of talks with creditors this fall.

So far this year, the concession of 14 regional airports, the Lito hotel on Myconos and the Modiano Market in Thessaloniki have fetched just 1.22 billion euros.

There are, of course, other projects that are under way but the anticipated revenues do not suffice. These are the sale of 67 percent of Thessaloniki Port Authority, a 20-year extension to the Athens International Airport (AIA) lease and the sale of 100 percent of railway firm TRAINOSE. These three will fetch no more than 876.9 million euros by end-2018. If the target from the sale of 66 percent of gas grid operator DESFA is met, this will add another 200 million, plus a few millions from railway subsidiary Rosco – totaling 2.33 billion euros.

At best, some revenues will also come from the Elliniko plot, if and when the bureaucratic barriers are lifted, fetching some 310 million, for a sum of 2.64 million euros.

Therefore sell-off fund TAIPED will have to scour its portfolio of holdings for revenue sources adding up to 1.9 billion euros. One possibility would be successful tenders for the completion of the Egnatia Odos highway and the concession of the state’s 30 percent in AIA. But even if that is realized, which appears unlikely given the past record, it will be extremely difficult to collect the missing 1.9 billion. It would be even more difficult to complete the sale of the 65 percent of Public Gas Corporation (DEPA) within 2018.

As creditors will not accept yet another resetting of sell-off targets, especially after the lengthy delay in the operation of the Hellenic Corporation of Assets and Participations, TAIPED will have to use its contingency plan: the concession of a selection of stakes such as 17 percent of PPC, 5 percent of OTE, 35 percent of Hellenic Petroleum, and to a lesser extent 23 percent in Thessaloniki Water Company and 11 percent of Athens Water Company. However, these would all require changes to the regulatory framework and approval of the modified contracts.