State corporations being held together with short-term fixes

For years governments have been trying to patch the holes of a series of problematic state corporations – among them mining company Larco, Hellenic Post (ELTA), Hellenic Railways Organization (OSE), Hellenic Aerospace Industry (EAB) and Hellenic Sugar Industry (EBZ) – but the wounds beneath those patches have been allowed to fester, and now those companies pose a serious threat to the Greek economy.

The reforms the country was forced to introduce during the crisis on the directives of its creditors have either not affected those companies or not had the desired result on them, although some constitute emblematic cases of the negative landscape that led to the financial crisis to start with.

Their well-known problems were swept under the carpet, solutions were postponed, and now the issues are reappearing, but today they’re worse. The government appears to be procrastinating, which has proven to lead to the aggravation of problems in the long term, while only offering short-term solutions driven by the fear of political effects.

For their part, the companies’ employees are at risk of losing their jobs and are reacting. What is certain is that the cost to the economy will be heavy.

Larco’s overdue debts to Public Power Corporation come to more than 300 million euros, despite repeated settlements in the past, and the electricity company, which has its own problems, does not intend to continue supplying Larco with power if the latter is just going to run up more debts. After all, besides PPC, Larco in also in arrears to others, while its total dues stood at 481.45 million euros in 2015, according to its last available financial report.

PPC is also awaiting the payment of 15 million euros from ELTA, which withheld the money of customers paying their electric bills at post offices. ELTA also has a loan of 115 million euros from the Deposits and Loans Funs that it is not servicing. Can the mail company be saved? All hopes depend on a study expected in January, with proposals for one more effort to streamline ELTA.

OSE has accumulated losses of 8.5 billion euros and is hoping to be saved by the European Commission, which may approve the write-off of its debts. Other companies with past sins, such as EAB and EBZ, are also at breaking point.