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Crucial week for privatisation

09 January 2016 / 18:01:30  GRReporter
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Two important privatisations will be discussed next week. On Tuesday, 12 January, the Privatisation Agency board will hold its meeting to discuss the privatisation of the port of Piraeus and the Hellenic Railways Organisation (TrainOSE).

In the presence of the Agency's foreign experts, the only bid for the biggest port in Greece will be open at the meeting. Although the agency has been silent so far about the number of bids, there are all the signs that once again COSCO will be the only candidate. True to its commitments, and a few hours before the expiry time, the Chinese company submitted its bid for the competition on 21 December, 2015.

The Agency management is not expected to have a hard time at all approving the sale of 51% (plus 16%) of the port shares to the single interested investor as long as the financial part of the bid meets the government's expectations in terms of privatisation revenues. COSCO's technical bid is not being disputed as the company has already proven its capacity as manager of terminals ΙΙ and ΙΙΙ, which have transformed Piraeus into a leader not only in the Mediterranean, but on the European scale as well. Therefore, the price offer remains the key variable, although the government and the Privatisation Agency will probably demand a higher price whatever the bidder might offer. This is precisely the reason why the sale of the port will not be dealt with by next Tuesday, but will instead take another 7 to 10 days.

The adversaries of privatisation have already roared their discontent. These are the far left factors in Greek political life, as well as the port workers who see the deal as the death knell for multiple privileges. The roughly 1,150 port employees received a total of €53 million in 2014, which is equivalent to a monthly salary of €3,250 per head. Most of the naysayers, despite admitting that things are irreversible, believe COSCO will try to swing a very low bid and thus put the agency in an awkward position.

The second deal – the privatisation of the railways – is much more problem-ridden. Agreements between the railways and its service providers will have to be concluded as soon as possible. The most important among them is the contract with the Greek company for rolling stock maintenance. This contract has turned into the bone of contention as its financial part will determine the value of either of its sides. Yesterday, the railway employees yet again managed to put off the company's board meeting, at which would be discussed the agreements with both the rolling stock maintenance business and GAIAOSE, the company responsible for the real estate owned by the Greek railways. Unionists believe that the intended annual amount that OSE should pay for the maintenance of its rolling stock is exorbitant and reduces OSE's price in favour of the maintenance business. The management of the Privatisation Agency, however, has estimated the price at a rock bottom level, and believes that some sort of a golden mean would be negotiated, which will allow the contract to be signed next week.

Another agreement to be mooted at the Privatisation Agency's board meeting is the one with the government for servicing unprofitable lines, worth €50 million. It was approved by the Control Board and is an important asset for the privatised company.

Tags: privatisation port of Piraeus Hellenic Railways Organization Privatisation Agency
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