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Greece Forging Ahead With Port Sales to Help Spur Ailing Economy

Greece Forging Ahead With Port Sales to Help Spur Ailing Economy

Greece is banking on the privatization of more regional ports to strengthen its status as a transport hub and help lift an economy reeling from the decade-long debt crisis and the fallout from the coronavirus.

The Mediterranean country’s state privatization fund plans early next year to start the tender process for two more ports -- Irakleio and Volos -- following recent tenders for harbors at Alexandroupolis, Kavala and Igoumenitsa, Riccardo Lambiris, chief executive officer of the Hellenic Republic Asset Development Fund, said in an interview in Athens.

The Port of Piraeus, Greece’s largest harbor, has become the Mediterranean’s top container-handling port and the fourth-biggest in Europe since China’s Cosco (Hong Kong) Group Ltd bought a majority stake in 2014. Greece also completed the sale of a 67% stake in Thessaloniki Port, the second-largest, in 2018.

“With the privatization of regional ports, combined with the already developed Piraeus and Thessaloniki ports, Greece is rapidly becoming a transport and logistics hub for the region,” Lambiris said. “Development of the ports will bring growth as they have significant operational potential.”

Greece lost around one quarter of its economic output during the debt crisis that took hold a decade ago, and the economy is expected to contract by around 8% this year due to the impact of the coronavirus pandemic. Its unemployment rate is still the highest in Europe.

Growth in transport activity could help drive a recovery. The Igoumenitsa and Alexandroupolis ports are located at either end of the Egnatia Odos highway that crosses northern Greece and connects Italy with Turkey, while Alexandroupolis also provides easy access to the Balkans.

Development of natural gas import and storage capacity is another potential source of growth, Lambiris said. Gastrade SA is developing a floating LNG reception, storage and regasification unit near Alexandropoulis, while the port of Kavala is close to a planned underground natural gas storage facility.

Covid Impact

Greece has recorded just over 4,000 coronavirus cases, compared with more then 200,000 each in Italy and Spain and the pandemic has had limited impact on the fund’s plans, Lambiris said. It will push back a tender to sell a 30% stake in Athens International Airport and the process will likely begin in the first quarter of next year.

“Covid-19 has only increased our determination to proceed with the privatization program for the service of the public good,” Lambiris said. “There is a big pipeline of projects expected to be completed in 2021.”

A study published last week by the Athens-based think tank the Foundation for Economic and Industrial Research showed that privatization boosted Greek economic output by around 1 billion euros ($1.1 billion) on average for every year from 2011 to 2019.

Another key project is the planned sale this year of the DEPA Commercial and DEPA Infrastructure gas operations.

Greece has selected seven parties to make binding bids to buy a 65% stake in DEPA Commercial, with an option to purchase the remaining stake, and six parties for binding bids to acquire 100% of DEPA Infrastructure.

DEPA Commercial oversees the wholesale and retail gas activities of state gas supplier DEPA SA, including the import of natural gas into Greece either via pipelines or as LNG, while DEPA Infrastructure runs gas distribution.

“We would like to have the preferred bidders for DEPA infrastructure and DEPA Commercial in the fourth quarter of 2020,” Lambiris said.

©2020 Bloomberg L.P.