After failing to get a single bidder for its natural gas company DEPA as part of a lagging privatization effort, Greece is going to relaunch the tender process again in hopes someone will have some interest, Deputy Energy Minister Asimakis Papageorgiou said on June 10.
That came after the privatization effort was undercut by the failure to get a bid for DEPA and only one for the gas grid operator, DESFA, that from Azerbaijian’s state oil and gas company SOCAR.
“DEPA’s privatization will be reviewed and relaunched very soon,” Papaeorgiou told reporters, but added that it is too early to say whether this will finish in 2013.
Russia’s state gas giant Gazprom, widely seen as the front runner, withdrew from the tender for DEPA. He said that there was no official briefing from Russia, but according to Russian officials they raised concerns over strict rules from Europe’s competition authority. “There is no issue between the relationships of the two countries,” he added.
Gazprom’s Chief Executive Officer Alexei Miller had visited Athens three times in recent weeks for talks on Depa. The deadline for bids was June 10 but the lack of interest stunned Greek officials who were hoping to propel the privatization program while under pressure from international lenders to speed it up.
Greece said that SOCAR’s bid was helpful. “This raises the possibilities for the creation of the Trans Adriatic Pipeline,” the deputy energy minister said.
TAP is a proposed pipeline that would bring gas from Azerbaijan to Europe, part of a European effort to diversify the continent’s energy supplies and reduce its current over reliance on Russia and would bring some 1.5 billion euros ($2 billion) to Greece.
The TAP project aims to transport gas from the Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and further into Western Europe. The project, if successful, will open a new so-called Southern Gas Corridor to Europe and establish a new market outlet for natural gas from the Caspian.
DESFA and DEPA were seen as crown jewels of Greece’s lagging privatization program which had gotten a boost last month with the sale of a 33 percent stake in the gambling monopoly OPAP.
Since its first bailout loan in May 2010, Greece has consistently failed to meet its privatization targets and has repeatedly scaled back an earlier goal of raising 50 billion euros ($66.1 billion) from asset sales by the end of the decade. It now aims for 11.1 billion euros ($14.68 billion) in privatization proceeds by the end of 2016, and 25 billion euros ($33.07 billion) by 2020.
The British newspaper The Guardian wrote that the news was devastating for Greece, which is counting on privatization and foreign investors to help it pull out of a crushing economic crisis and overcome a staggering debt of $390 billion.
“Greece’s already troubled privatization program lies in tatters after the failure to sell the natural gas company DEPA to the Russian energy company Gazprom. Given that DEPA was seen as the “jewel in the crown”, the chances of Greece hitting the target of €2.6 billion ($3.44 billion) of asset sales in 2013 now look extremely slim,” the paper wrote.
“Ploughing on with privatization at the current juncture would be a fire sale. Greece would get less, probably much less, than the assets are worth,” it added.
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