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Friday, 21 August 2015

October deadline set for Piraeus port privatisation bids

Following the approval of loan terms from European lenders to prop up the Greek economy, the country’s government has announced deadlines to receive investment bids as part of national privatisation plans for its two largest ports.

The Port of Piraeus ,the larger of the two,  will be the first to be privatised with a deadline set to receive binding bids by October this year. Bids for the tender to operate the Port of Thessaloniki are then expected to follow in February 2016.

The privatisation programme initiated at the insistence of Greece’s creditors is estimated to raise around €6.4 billion by 2017, according to figures from Reuters.

Last month, the government proposed a new law to ease the bidding process for the  Port of Piraeus with the introduction of  a master concession contract between the government and the Piraeus Port Authority (PPA). This will offer exclusive rights of use and exploitation of land, buildings and infrastructure.

It is envisioned that property rights will remain in the Greek state and port authorities will pay 2.0% of turnover in exchange for the concession contract.

As one of the major gateway ports to Europe, Piraeus is of key importance for shipping lines and will likely be a prize acquisition for the winning bidder.

China is one of the key players bidding for Greece’s port assets and has already invested heavily in the country’s port sector as part of its ambitious $41 billion ‘Maritime Silk Road’ project,.

According to research consultancies Baker & McKenzie and the Rhodium Group, Chinese investment in the country increased from $2 billion in 2010 to a massive $18 billion in 2014.

Chinese shipping firm Cosco has already claimed a stake in the Port of Piraeus and operates Pier II and III via its subsidiary Piraeus Container Terminal (PCT). Strong links with Asia have helped volumes at the port increase eight-fold since 2008.

Development work is currently planned to expand capacity of Piers II and III at the port to 6.2 million TEUs annually from 3.7 million. Upgrade work is also planned to improve infrastructure and rail links between Piraeus and European destinations such as Austria, Hungary, the Czech Republic and Slovakia.

The first major concession as part of Greece’s privatisation plan was announced earlier this week but has already hit problems after reports that Fraport and Copelouzos Group were backing out from binding agreements that would have seen them secure a 40-year concession to operate 14 regional airports for €1.2 billion.

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