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Greece is rushing to meet privatization targets before bailout deadline

Greece is in a hurry to sell some of its state assets, in what is one of the most critical issues for the country as it races to end a bailout program in August. Greece is set to hit lower-than-expected proceeds under a privatization program this year, after it failed to reach its 2017 target.

The country’s massive privatization program is a condition of its third bailout. In 2015, Greece received a 86 billion euro program and is obliged to sell several state-owned enterprises to boost its economy. But this financial assistance is set to end this summer.

US-network  CNBC takes a look at how far Greece has yet to go to carry all the privatizations requested by creditors and seeks the answer into “Why the delays?”

“Overall the picture is mixed with progress in some areas being offset by delays elsewhere,” a report from the European Commission in March said.

In 2017, privatization proceeds reached 1.4 billion euros, which fell short by 0.5 billion euros from the target that the country had agreed with European creditors in July of that year.

“This was due to delays (mainly on the side of the preferred bidder) in the financial closing of the sale of 67 percent of the share capital of the Port of Thessaloniki and delays in the launching of the process for the sale of 5 percent of OTE (telecom company),” the same report said.

There were several stumbling blocks delaying the sale of the port, which is one of the largest Greek seaports and based in the north of the country. In October, for example, the preferred bidder — the consortium of Deutsche Invest Equity Partners, Belterra Investments and Terminal Link — hadn’t yet presented to the Greek authorities the company that would be managing the port.

As a result, the Greek State Audit Council couldn’t approve the deal. The sale, which was supposed to be finished in 2017, only concluded last month. The deal was worth 1.1 billion euros.

“Privatizations are key to conclude the program, but they are not a make-it-or-break-it issue to determine a clean exit.” -Danae  Kyriakopoulou, Chief economist at OMFIF

Meanwhile, Greece’s privatization agency HRADF launched an international tender to sell 5 percent of the telecom firm OTE in February.

In total, the bailout program includes 19 privatizations. These include the sale of 10 port authorities, real estate assets, the Hellenic Post and the Athens water supply, to name just a few.

DESFA (natural gas operator) The sale of 66 percent of the company has to be closed by June 2018.
Hellenikon Airport The agreements to redevelop the site of the former airport need to be closed by June.
Egnatia motorway Implementing a new pricing toll needs to be done by April 2018.
HELPE (Hellenic Petroleum) There is a 51 percent stake of the company to be sold. The transaction should be completed by end-July 2018.
PPC (Public Power Corporation) The sale of 17 percent of PPC needs to be concluded by June.
AIA (Athens International Airport) The extension of the concession agreement will be ratified in parliament by April 2018

Given the delays in 2017 and the complexity of the process, Greece could continue with privatizations into 2019. (full report CNBC)

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