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Russian interests capture the Greek energy sector

08 June 2013 / 12:06:35  GRReporter
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The Public Property Management Agency is negotiating on behalf of the government a high price in the competition for the state natural gas company and the national gas distribution network operator, which will be completed next week, as well as reduced gas prices. The competition has already reached its final form after all the phases through which it has passed over the last 14 months (the call for expressions of interest was announced in February 2012). The offer of Gazprom, which covers 76% of the natural gas needs, has remained in force as regards the gas company (after the withdrawal of Sintez). All the requirements of the head of the Russian energy giant, Alexei Miller, have been met completely. In this situation, the Greek state has put on the negotiating table the hot issue of reducing the prices of natural gas supplies to Greece, which are among the highest in Europe.

Russian demands

The Russian side did not raise this issue until its demands had been met, including the amount of the guarantee, its reduction in favour of the bidder and the settlement of debts from private producers of electricity amounting to 450 million euro. A significant reduction in natural gas prices is being discussed at present which could reduce the initial cost of the company, which, from 900 million euro in the binding offer, has fallen to 800 million euro, according to persons involved in the negotiations, who also ensure that an agreement will be reached.

The problem is how the European authorities will perceive this privatization. Reducing the price of gas is related to the completion of the privatization process and to the signing of the agreement. In other words, if the gas company does not pass into the hands of Gazprom, the price of the gas supplies to Greece will not be reduced. At the same time, it is expected that the fate of the distribution operator, which owns the gas network from the border and is participating in the "war of the pipes'' from Asia to Europe, will be decided as well. Nobody can be sure whether Sintez, which has left the competition for the gas company, is going to submit a bid for the gas distribution network operator.

The cartel between PPF and Terna

The opinion of the cartel between the Czech firm PPF and the Greek Terna is not yet known. From this point onwards, the Azerbaijan Socar company will draw the interest of the gas company. This application is related to broader strategic interests, particularly the participation of Greece in the construction and management of the TAP pipeline, which will start from Kipi on the border with Turkey, cross northern Greece and reach Albania. From there, under the sea bed, it will reach Italy, where it will connect to the Trans-European energy networks. The pipeline will be supplied from the Shah Deniz field in the Azerbaijan part of the Caspian Sea. The involvement of Greece in the company that will operate it has been negotiated with the government of Azerbaijan for a long time now. The issue was also discussed during the Greek Prime Minister’s recent visit to Baku. Today, the company involves the firms Statoil (Norway), Axpo (Switzerland) and the German E.ON. If Socar wins the competition for the gas distribution system even with the symbolic 1%, this would significantly facilitate the participation of Greece.

The privatization of the public gas company will also pave the way for the privatization of Hellenic Petroleum. The state airport "Eleftherios Venizelos" in Athens, the provincial airports, the state water company, the ports of Piraeus and Thessaloniki are the next major companies in the privatization plan.

Public properties - in two groups

The Privatization Agency selects the properties to be sold which are divided into two groups. The first includes properties that will be privatized and that will increase the revenues. The second concerns the Ministry of Finance and it will include properties that will be sold but the revenue from their sale will be added to the non-taxable income. The properties that will be sold through bonds must have two specific characteristics: they must be cleared of any legal problems and in parallel, investors must be convinced that they will obtain increasing revenues from them.

The sale of the properties is urgent in view of the fact that by November, the Agency must draw up a plan for the sale of approximately 76,000 properties that are in the portfolio of the public property company as well as a plan to transfer hundreds of properties, which are now controlled by various state organizations, under the control of the public property company.

Revenue from former barracks

The report by the International Monetary Fund (IMF) as well as that of the European Union (EU) on the implementation of the memorandum pays particular attention to the properties of the Ministry of Agriculture and the Ministry of Defence as a source of revenue from the sale of properties. A plan specifying the opportunities and mechanisms for the sale of these properties should be presented to the Troika by November.

Tags: PrivatizationGazpromPrivatization AgencyPublic gas companyNational gas distribution network operatorHellenic Petroleum
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