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Lenders’ Water Torture: Two Privatization issues delay Greece’s Program Review & bailout tranche

Greece and lenders are just a couple of steps away to conclude the Greek Program Review and have the 7.5-billion euro bailout tranche arrive in Athens and from there have 90% of the loan turn back to lenders. The Euro Working Group did not close the Review yesterday, Monday, but gave Athens a couple of hours to fix the prerequisites that are still open.

At the center of the issues that still need to be fixed are the Agreement between Lamda Development and Greek Privatization Fund (HRADF) for the old Athens airport Ellinikon and the transfer of 5% of Greek Telecommunication OTE to Privatization Fund.

The agreement for Ellinkon was supposed to be signed yesterday “but for some unknown reason it did not happen,” notes news portal in.gr. The two sides will reportedly give it another try today.

Tuesday noon, government spokeswoman Olga Geroasili said that the Memorandum of Understanding (MoU) between the contractor and the HRADF will be signed today with a horizon of November 16th 2016. This means that negotiations have not been concluded “because the government target is to increase investment with public benefit, decrease of building construction and more green etc.” so Gerovasili.

The bid of Lamda Development for Ellinikon was not considered as a good deal for the Greek state as there was criticism that it was given under the price.

As for the OTE, the transfer is still pending apparently due to Deutsche Telecom that is the biggest shareholder with 40% of OTE shares and has the “Right of first Refusal“. The issue is expected to be solved once the Deutsche Telekom decides whether it will bid to acquire the 5% of OTE shares or once OTE-Deutsche Telekom and HRADF agree to add specific clauses in the agreement.

The shareholders structure of OTE is:

1.Deutsche Telekom: (40.0%)

2.Hellenic Republic: (10.0%)

3.International institutional shareholders: (29.5%)

4.Greek institutional shareholders: (10.7%)

5.Other shareholders: (9.8%)

Greeks and lenders are reportedly confident that the last prerequisites hurdles will be  off the way by Thursday, the EWG will give the green light for the bailout tranche release, and six national parliaments will have to accept the decision. The €7.5 billion are expected to reach Athens in the second half of June – for sure before the Brexit referendum, I suppose, in order to convince the Britons that the EU is a nice thing worth being a member of.

Will the Greek torture be over then?

Hardly. A second package of outstanding issues will be postponed for autumn and be part of the second program Review. According to Greek media, the package includes: “reforms” in electricity prices for large consumers, reforms in banks management, reform of Civil Aviation authority that is necessary for the privatization of the 14 regional airports, some issues in the Pensions Reform.

This second package is only a ‘package’ within the load of another wave of “reforms”.

Knowing the lenders, I assume, the list is and will be much much longer. They never run out of ideas.

PS At the end of the program, feral cats will be on a 5.5-kibble-ration per day and dry food will be sold with something like 78% Value Added Tax.

It’s Tuesday and I still feel good.

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