Greece to sell valuable assets in privatization plan

by Andrew Jay Rosenbaum

ANKARA

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 recapitalize 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.

For now, 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.

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 recapitalized as part of the bailout plan -- about €10 million has already been paid out by separate bailout funds for this purpose -- and the banks control a large share of the Greek market.

There has also been a report that Azerbaijan’s state-owned energy company SOCAR is negotiating to acquire a stake in 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 privatizations 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.