News Posted On: 16 January 2014
2013 has been a positive year for Greece considering the debt-mountain it had to climb at the beginning of the year. However, it could have been a more fruitful year if the country’s court of auditors had not intervened in the sale of almost 30 state assets to a couple of companies based in Athens.
The country had targeted selloffs worth 1.3 billion for 2013, and despite promising signs of accomplishing its goal, Greece fell short.
Greece has a rescue package worth 240 billion euros, and the sale of state assets forms a key component of the package.
However, the debt-laden economy has thus far encountered several different setbacks forcing it to twice lower its target for privatisation proceeds in 2013. The main reason for its failure is identified as DEPA’s (Natural gas firm) inability to receive any attractive bids.
Real estate insiders have revealed that a number of “technical issues” regarding the sale of 28 state assets were raised by the court of auditors, but there was hope that the matter would soon be resolved.
HRADF to appeal against decision to block deal
The HRADF privatisation firm was set to appeal against the court for blocking a deal which was expected to collect more than 260 million euros. Over the past year, Greece has raised 960 million euros owing to privatisation proceeds, as confirmed by budget figures released by the state.
The 261 million euros that were supposed to come in through the sale of 28 state assets would have helped the country clear its target, but it did not materialise, leaving Greece in a troublesome state already having lowered the target twice.
Ethniki Pangaia – a real estate firm and Eurobank Properties were chosen in October 2013 as the bidders most preferred for the transaction which the state had originally intended to seal by the end of the year.
Both companies continue to attract hundreds of millions of euros from overseas investors at the moment, with Invel Real Estate – a private equity firm and Fairfax Financial Holdings – a Canadian investor responsible for a large part of its income.
The privatisation deals signed by Athens since 2011 are worth around 3.8 billion euros, raising around 2.6 billion euros in cash in total.
European Union and International Monetary Fund pressurizing Greece
Since Greece had to seek a bailout following an economic downfall earlier in the decade, the country’s international lenders – the International Monetary Fund and the European Union demanded the implementation of an asset sale program.
However, both organisations suffered a massive blow when DEPA failed to attract any concrete bids after Gazprom – the biggest gas producer in the world hailing from Russia, as well as the frontrunners to complete the purchase withdrew during the final stages.
The nation has made plans to offload DEP again in 2014. However, market analysts are sceptical about the sale, fearing that it may not be completed due to the European Union’s regulatory obstacles and lack of investor confidence.
Written by Les Calvert