Greece seeks billions from privatization of industries
By Lefteris Papadimas and Greg Roumeliotis, Reuters
June 4, 2010, 10:42 am TWN
ATHENS -- Debt-ladden Greece on Wednesday outlined plans to raise more than 3 billion euros by selling stakes in some of its struggling state-run businesses but said it will hold back its more attractive assets.
Analysts welcomed the objective to shed loss-making firms but said selling non-listed assets may be difficult and stressed it would go only a small way to dent Greece's debts of 310 billion euros.
"Our objective is to have a state which guarantees public services but at the same time taps the dynamism of Greece's economy," Finance Minister George Papaconstantinou told reporters after a cabinet meeting. The privatization plan is part of an EU-IMF austerity programme, which calls for revenue of 1 billion euros per year from privatizations for the 2011-13 period. "Our estimates are definitely higher than this," Papaconstantinou said.
As part of the plan, the cash-strapped government will sell 49 percent of loss-making railway company OSE and 39 percent of loss-making Hellenic Post.
However, it will maintain its 34 percent stake in OPAP, which has a monopoly in the lucrative Greek betting market, its 20 percent stake in the Balkans' largest telecoms company OTE, and its 51 percent stake in profitable power utilities PPC.
"The public sector needs to shrink and the fact that they are trying to shed loss-making business is positive," said Citi economist Giada Giani. "But when it comes to non-listed companies, clearly the sale process will require time."
The government will sell a 23 percent of Thessaloniki water company EYATH and 10 percent in Athens water firm EYDAP, both of which are profitable. It will also set up two companies holding state real estate assets, which could be listed on the stock exchange to attract private investment.
"We are in a very sensitive fiscal and credit environment. Our logic is not one of ... low prices. Any decisions we make are made after a lot of consideration and with a lot of attention," Papaconstantinou told reporters. Greece also seeks to tap the betting market further, by extending OPAP's monopoly, which was due to end in 2020, granting licences for low-price gaming machines and selling its stake in casinos as well as regulating online betting.
The country's regulated betting market, which includes all OPAP games, along with the casino, horse racing betting and state lotteries, was worth about 8.7 billion euros last year.
The Athens stock exchange has lost 30 percent since the beginning of the year, as Greek stocks are taking a hit from the country's recession and severe debt crisis. It closed up 0.7 percent, little changed following the plan's launch.
Delivering on the plan will be essential, economists said. "If the EU/IMF 2011-2013 privatization targets can be exceeded, as the finance minister said today, this would be positive, it would add credibility," BNP Paribas economist Luigi Speranza said. "But it is essential they deliver, they have a difficult adjustment to make."