Greece won't renege on privatizations after bailout ends: state fund CEO

[February 15, 2018] By Angeliki Koutantou and Renee Maltezou

ATHENS (Reuters) - Greece won't backtrack on its privatization plan after its bailout ends and expects state companies to submit plans by April to make themselves more competitive, the head of its state assets fund said.

Greece, whose bailout ends in August, has agreed with lenders to raise another 3 billion euros ($3.7 billion) by 2019 from state asset sales and has promised to launch stake sales in Athens International Airport (AIA), gas company DEPA and oil refiner Hellenic Petroleum <HEPr.AT> by next month.

Privatizations have been a pillar of the country's three bailouts since 2010, when its debt crisis exploded. But they have raised proceeds of just 5 billion euros, rather than a targeted 50 billion euros, mainly due to the crisis, political and union resistance and bureaucracy.

Rania Ekaterinari told Reuters that Greece is committed to pushing ahead with privatizations, which have been agreed with lenders.

"I can't say that I see any risk right now," she said in an interview, when asked if privatizations were at risk in the coming months and after the bailout ends.

Ekaterinari took over a year ago as CEO of the Hellenic Corporation of Assets and Participations (HCAP), set up in 2016 as part of a bailout that kept Greece in the euro zone. It oversees the agency in charge of state asset sales, HRADF.

Creating HCAP, which will manage state assets for 99 years, was seen by many Greeks as a major concession by the government to its lenders in 2015, when the country signed up to its third bailout, and a strike against its sovereignty.

Ekaterinari said increasingly Greeks understood "the mission and the value that such an organization could bring."

"I believe that it (privatizations) has grown on most people's minds," she said. "I don't think that anyone can argue in favor of ... a fragmented model where someone could decide randomly on what will or won't happen."

Mismanagement, political influence and lack of a cohesive strategy have hurt some state firms in the past.

By June, Greece needs to conclude the lease of a vast seaside property, the sale of gas grid DESFA and launch the sale or the securitization of a stake in electricity utility Public Power Corp. (PPC) <DEHr.AT>. It will later sell minority stakes in water utilities EYDAP <EYDr.AT> and EYATH <TWSr.AT>.

Ηalf of the revenues from privatizations are earmarked to pay down Greece's debt, which stands at 180 percent of its output. The rest will be pumped back into state companies and investments to help economic recovery, Ekaterinari said.

Some state holdings in entities, including PPC, water and transport companies, were transferred to the fund in January.
 

HCAP also aims to improve the capital structure of the entities it supervises within the next two years, before restructuring them within three to five years.

"A longer-term strategy assumes that you have solved some of the hot problems ... also due to the Greek crisis, such as access to funding, better resource management and addressing bill collection issues," said Ekaterinari, who was deputy CEO of PPC in 2010-2015.

Τhe fund has started giving guidelines to state companies that it supervises, which are tailor-made and "not wishful thinking", she said, asking them to submit business plans by April, to become viable, more efficient and competitive.

"Quite often it's the fear of change, fear of the new," said Ekaterinari, an electrical engineer. "Many entities ... want to change and move on to the next day because they feel that, otherwise, they won't be sustainable."

($1 = 0.8015 euros)

(Editing by Susan Fenton)

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