DEPA Privatization gets a Boost
The privatization of Greece's DEPA, which has been delayed and rumored to have been complicated by a variety of political and diplomatic issues, recently received a boost when the Greek privatization agency (TAIPED) responsible for the divestiture process, leaked to local press its intentions and timetable.
It was made known that the process re-enacts from the 9th of January onwards and by the end of the month all binding offers will be submitted and reviewed both by the board of TAIPED and also by independent consultants of the process such as N.M Rothschild bank, Greek Alpha Bank and legal advisor Clifford Chance. It was also made known that TAIPED acts for the interests of the Greek state to bring in the highest bids possible and the economic criteria is by far the most important. Otherwise the reliability of the whole privatization process of the Greek state is at peril.
Furthermore, a high-level governmental official from the Ministry of Energy noted that there is no fear of monopolistic practices by any of the participating companies should they acquire DEPA and DESFA, the Greek network operator. This is due to the full liberalization of the market, as it exists since early 2011 with independent suppliers being able to import the commodity without any restraints. Moreover the Greek competition authority has recently decided that DEPA could only use up to 50% of the total capacity of DESFA, thus leaving open space for competition for the supply of the market.
The successful bidder of DEPA and DESFA would be obliged to separate their commercial activities. TAIPED commented that all five participating companies in the auction process have agreed in that respect. In addition, all companies have agreed to present mechanisms that will ensure the supply of the local gas market in any event, including leaving space for competitors.
Another interesting aspect is that there were leaks to the Greek press regarding the non-binding offers submitted. Russia's Sintez-Negusneft is reportedly willing to pay 1.9 billion Euros for both DEPA and DESFA, whilst Gazprom it was revealed is willing to pay 900 million Euros for DEPA alone, without knowing yet the sum for the other company. Greece based M & M Gas offered 450 million Euros for DEPA alone. No data was available for the PPF Fund, Greek GEK or SOCAR.
The aforementioned confirms earlier estimations by Natural Gas Europe that the price tag may exceed 1.5 billion Euros in total for both companies and that the Russian entities are leading the competition. With the apparent resolution of competition issues and by the assurance of the Greek agency that the price is the determining factor, it is likely that Gazprom and Negusneft will contest the final round of the process. As for SOCAR, it may well be premature for Azerbaijan's state player to invest a considerable amount of capital before the announcement of the "Southern Corridor" preferred route which is due after the end of DEPA's privatization process.