Opportunity in forced privitisation
Photo courtesy of Flickr Boublis
Controversial privatisation in sections of the Greek economy could offer foreign firms significant returns on investment.
The country is meant to dispose of state held assets as part of its bailout programme. This has met with fierce domestic opposition, accusations of incompetence for the government organisation handling the privatisation, the Hellenic Republic Asset Development Fund (HRADF), and accusations that assets are being sold off too cheap – inviting an international takeover.
However, some progress has been made. Initial assets have been put up for sale and an announcement regarding the plan for privatisation in Greece’s major ports is expected in the next few weeks.
The Greek government must divest itself of assets including property (domestic and international), rail and road transport, airports and ports, utilities and parts of the state-owned gambling sector.
Interest in Greek ports is thought to be high. HRADF have already offered up a number of small tourist ports and marinas.
The state has not yet decided exactly how it will proceed with the privitisation of its larger commercial ports, says Dr George Vaggelas, advisor to the Thessaloniki Port Authority and research fellow in European Port Policy (EPP) at the University of the Aegean, Greece.
According to Dr. Thomas K. Vitsounis, an independent logistics consultant and member of PortEconomics.eu, a web-based initiative aiming to advance knowledge on seaport studies, there is currently only one port in Greece that is privatised.
“Results are good,” he says. “It tripled the container traffic within one year and the profit has been high. But despite the positive example, it remains difficult to progress with privatisation.”
But there are also geopolitical problems. Some fear the growing Chinese and Russian influence in the country. Gazprom, the Russian state gas firm, is interested in Greece’s gas reserves, while both Chinese and Russian firms are interested in assets and infrastructure such as the ports. For example, Russian Railways are thought to be interested in aspects of the larger commercial ports.
Nevertheless, Greek ports remain an interesting target for other foreign firms as well. The sector is one of the few Greek economic success stories at the moment.
“The past has shown that in huge downturns of the shipping markets, for example the oil crisis, Greek ship-owners are able to overcome the difficulties with the minimum impact for their companies,” says Dr Vaggelas.
The resilience of Greek shipping and the ports supporting it help to provide reassurance in a time of economic difficulty.
“Shipping is the only thing that Greeks may remain proud of,” adds Dr Vitsounis. “There is no other sector. In my opinion, it could remain significant for the next decade at least.”