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Privatization typhoon to swallow airports, ports, casinos and energy

19 November 2010 / 16:11:47  GRReporter
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State enterprises operating airports, ports, casinos, public energy companies, state gambling, railways and urban transport are the first in the privatization plan of the George Papandreou’s government. The government will launch reorganization and privatization programme for 11 state enterprises early in 2011 that is expected to earn one billion per year in the 2011-2013 period.

In the sectors of infrastructure, transport and communications, the Ministry of Finance in conjunction with other institutions prepared the sale of part of the Greek post offices, the railway company, Egnatia Highway and the frequency bands in the country. The government plans to continue the concession contract for the Athens International Airport. Regional airportss management is planned to be gradually separated from the civil aviation body by establishing corporate structures that will allow concessions similar to the one of the Athens International Airport. The establishment of concession procedures for regional airports in the country will be effected during the first half of 2011. The results of these projects and the real benefit to the state, however, will come in a later period, which directly depends on the speed of licensing by the state.

The government will attempt to fully consolidate the budget of the troubled state railways in 2011. According to the proposed financial plan, this consolidation will have 800 million euros a year and partial privatization of some of the lines will start in the meantime. In its effort to reap the benefits of state ownership, the Ministry of Finance will try to let many of the deserted and unused buildings of the railway company. The first signals of the railway employees are not promising, taking into account that in the summer of 2010 their unions vowed they would set on fire the first private train in Greece.

The situation with other infrastructure projects is better such as the Egnatia Highway, which connects northwestern Greece with its northeastern part. The national road was built with a loan that is expected to be fully paid after signing concession contracts with private companies to maintain and manage it.  

Attractive for the private sector is the National Post (ELTA). The government plans to include a new strategic partner to acquire a minority stake with the right to manage it. The Greek government preferences tend to a European company with established traditions in postal services. The aim is to sell 39% of the National Post and 100% of the company that offers courier services themselves. There are serious hopes to attract key players in the sector after the management body of the National Post announced that this year will end with positive balance despite the crisis. According to informed sources, the result is due to cuts in public sector wages in 2010.

The government also encourages the frequency range development and distribution, including digital broadcasting, through concessions to the private sector. The use of the radio spectrum to broadcast digital signals offers new opportunities for product development in the fields of telecommunications, television and radio and will enhance a number of projects. The economic team believes that the introduction of new programs would bring substantial economic benefits, especially after the release of frequencies after the analog to digital television transition. This change will free up about 75% of the frequency spectrum. Independent consultant appointed for this purpose will make the evaluation.

Energy is another crucial sector of complete state monopoly so far. Implementation of existing EU directives will lead to a partial revising of the partnership between companies in the field and the management of their distribution networks. Companies that are at the heart of the privatization hurricane are the Public Power Corporation, the natural gas company, the state water company and Hellenic Petroleum. Regarding the natural gas company and the state water company, the government will tighten the control of their distribution networks. The reorganization program for other public companies will begin in 2011. It includes first corporate structure study and optimization, and evaluation of opportunities to sell 30% of the Greek power company. Water Supply and Sewerage Companies Ltd. and Water Supply and Sewerage-Thessaloniki SA will merge to reduce costs. The government’s goal is to split the facilities management and maintenance from ownership, signing concession contracts for part of the distribution network.

The state mining company LARKO is also in the list of companies for privatization as the company registered considerable losses in recent years. The government began to seek a strategic investor who can pull the company from the financial morass in which it sank. There were three serious incidents in the mines of LARKO for less than a month only the last year, one of which ended in death after the outbreak of a factory chimney. According to Notis Marias, representative of the public group from Larina, who spoke to Sky Radio days after the incident, the management failed to take measures to modernize the facilities because of the financial condition of the mine. At the same time, to indicate how the public sector works, Notis Marias stressed that despite all the difficulties the number of people on managerial posts increased from 14 in 2004 to 52 in 2007.

Tags: EconomyMarketsPrivatization
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