Long-awaited privatisation of Piraeus Port gets underway

Near the crossroads of three continents, Greece’s top port is the focal point of a logistics push by Prime Minister Antonis Samaras’ Athens government as it tries to steer the country out of a six-year recession, battles 28% unemployment and seeks to reduce $329bn of international emergency aid.

TAIPED ceo Yiannis Emiris said investors will have 45 days to express an interest with the target of completing the sale before the end of 2014. According to the draft text of the tender proclamation, submitted to parliament, the PPA will remain the port’s contractor until 2052 via a concession contract with the state. The government says this means the privatisation concerns the transfer of this concession, while the port infrastructure will continue to belong to the state and is not for sale.

There was no initial reaction to this arrangement from potential bidders, led by China's Cosco Pacific, but it is likely to be more acceptable to European competition authorities, than a wholesale sell-off.

The Chinese company already holds a prominent position in the port through its 35-year concession to operate container terminal II and III, signed in 2009, and has said it is set to bid, and has informed the EU of this. Cosco has revealed that within its bid documents the company, through local subsidiary, Piraeus Container Terminal (PCT) has presented plans of intended investment and development proposals, starting with Euro 230m, aimed at turning Piraeus into the biggest port in the Mediterranean.

Though Cosco seemingly holds the rails position, it will have competition from at least one other suitor, a consortium from New Zealand, comprising Morrison & Co and ICM Ltd. Morrison & Co is responsible for the management and administration of listed investment group Infratil Ltd.

Cosco is proving a wedge as interest among Chinese conglomerates in investing in Greece is growing as they become familiar with doing business with Greeks, primarily with the shipping sector. This is built on two pillars, either with Greeks as clients of China’s shipbuilders and equipment manufacturers or Chinese importers using Greek tonnage to carry much-needed raw materials.

Communications giant Huawei Technologies Co wants to use Piraeus as a jumping-off point for its products into Europe, while in another major coup Chinese consortium comprising Friedmann Pacific Asset Management (FPAM) and Shenzhen Airport announced March 6 it intends to acquire the majority stake in and management of Athens International Airport, adding AIA can become a source of considerable investment and growth for Greece.

With TAIPED yet to confirm the size of the stake to be put up for sale, FPAM managing director Eric Cheng, said everything remains open, though it is clear the larger the stake and the longer the concession period for the airport’s operation, the more satisfied the Chinese will be.

Cheng says his group wishes to create a gateway to Europe from Asia, and AIA appears to be the only airport with significant scope for growth. He notes the majority of European terminals have exceeded their capacity and now have limited or no margin for development.

“We have been negotiating with the Greek side for three years and our investment interest is well known. The larger our holding in the airport, the more scope we will have for investments,” says Cheng.

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