Greece Relaunches Pipeline Operator Sale

Greece’s privatisation agency Hellenic Republic Asset Development Fund (HRADF) has invited potential investors to express interest in taking part in a new tender to acquire 66% of infrasucture company, the other 34% remaining in public ownership. The target is to issue the tender formally before the end of the summer and complete the award process by the end of 2017. The previous, unsuccessful tender has now been formally closed.

Desfa was established in 2007 as a 100% subsidiary of Greece’s national gas company Depa, as part of the liberalisation of the Greek gas market. It owns, operates, maintains, manages and develops the national natural gas system and the LNG terminal on the island of Revythousa, near Athens.

The first tender to sell 66% of Desfa was launched in November 2015 and was won by Azerbaijan state Socar. But it was abandoned in October 2016 after disagreements following Socar’s proposal to reduce the price of the €400mn ($454mn) deal and Greece passing a law that raised Desfa’s gas tariffs by much less than Socar had expected.

In addition, EU’s Directorate-General for Competition ruled that the award to Socar broke EU competition rules with respect to the Third Energy Package. The EC asked Socar, which remains an integrated supply and transmission company, to sell 17% of Desfa to a third party, Italian transmission system operator (TSO) Snam, bringing its stake to 49%. 

As a result of these past problems, the new tender is confined exclusively to certified EU TSOs, who are members of the European Network of Transmission System Operators for Gas (Entso-G). Participation of non-Entso-G members in a consortium led by a TSO is permitted, but only with a minority stake.

It is understood that Snam, Belgian Fluxys and Spanish Enagas have expressed strong interest informally. The three also took part in the previous tender and are also shareholders in the TransAdriatic Pipeline, which will have synergies with the Greek gas system when completed some time in 2020.

Other interested parties reportedly include Dutch Gasunie, Romanian Transgaz and French GRTgas. In the past few weeks, executives of several of these companies have visited the Greek energy ministry and the HRADF to declare their interest.

The sale of 66% of Desfa was one of the prerequisites for the second assessment of Greece’s debt and was included in Eurogroup's ‘Compliance Report.’ EU Commissioner for Economic and Financial Affairs Pierre Moscovici confirmed that “a key element of the Greek programme is the privatisation of DESFA.”

The report set a target of €17bn from privatisations of Greek assets for the period 2017 to 2060. As part of this Greece has to generate revenues of €4.1bn in 2017 and €1.1bn by August 2018. The latter includes revenues from the majority sale of Desfa.

Charles Ellinas