Cosco's Turkish port foray shakes Greek privatisation plansCosco's Turkish port foray shakes Greek privatisation plans

Not a minute too soon either, as the move by frontrunner, China’s Cosco Pacific last week to take a major stake in Piraeus’ East Mediterranean container terminal rival, Turkey’s Kumport Terminal has shaken Greece.

Many believe Cosco’s decision to team up with China Merchants Group and China’s largest state fund, China Investment Corp (CIC) to buy a $950m stake in Turkey’s largest private port is a clear setback for Piraeus as, in the best case, it divides the Chinese focus.

However, Greek state sell-off fund Taiped was reportedly among those trying to play down the investment in Turkey, pointing out the high price Cosco has agreed to pay the Turks is a measure of the money the PPA sale could fetch.

Greece’s biggest port is three times the size of the Kumport Terminal and has far greater scope for growth, both in terms of containers and other activities, such as the car and cruise terminals, officials at Taiped contend. They ignore the capital controls now in force in Greece and the negative impact they are having on the country’s commercial activity.

Kumport is Turkey’s third largest container terminal and is able to handle ships of up to 18,000 teu capacity at its six berths. Kumport has a current container handling capacity of 1.84m teu, but reportedly has room for expansion to up to 3.5m teu, still someway short of Piraeus’ potential.

Further, the Turkish facility has the advantage a much stronger domestic market and its rail connections into eastern Europe are far superior to those of Greece.

At a time when Greek trade unions are likely to step-up their opposition to the privatisation of Piraeus, the Chinese trio will be planning the development of Kumport Terminal which is located in the Ambarli Port Complex, on the northwest coast of the Marmara Sea on the European side of Istanbul.

In the Kumport venture, Cosco and China Merchants each control 40% interest with CIC holding 20%. That means Cosco is to invest some $380m in the venture, which is a big commitment at a time when it could be asked to pay around that amount to gain a 51% majority stake in Piraeus.

Cosco Pacific subsidiary Piraeus Container Terminal (PCT) has been operating Piraeus container terminals II and III since 2010 under a 35-year concession agreement. The Chinese company has repeatedly said it is keen to secure the initial 51% control of the PPA and the government has already engaged in detailed discussion with China about the privatisation of the Greek port, which comes with an option for a further 16% stake if in five years the buyer invests Euro 300m ($340m).

At the beginning of summer the government said it was "in advanced talks" with the Chinese "to expand the co-operation very soon in relation with the inclusion of a railway network as well". Repairing Chinese ships in Greece is also on the agenda.

Comments made by Cosco Pacific on the Turkish venture also did little to calm Greek nerves. “The board is of the view Kumport Terminal has good development prospects given the potential business synergy between Kumport Terminal and the existing investment in Piraeus Container Terminal in Greece.”

The statement went on: “Furthermore, Kumport Terminal is situated in Turkey, which is a strategic location along the ‘Silk Road Economic Belt and the 21st Century Maritime Silk Road’.”