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Greek economy may lose huge capital injections by SOCAR
27.07.2016

Debt-laden Greece has accused the European Commission of delaying a deal on selling a share in Greece's DESFA gas transmission system operator to Azerbaijan’s state oil company SOCAR.

Greek Minister of Environment, Energy and Climate Change Panos Skourletis, addressing the parliament, said that a number of conditions, set by the European Commission, greatly slowed the privatization process of the gas operator, Greek media reports.

The minister reminded that the company will become a passive shareholder, not entitled to vote in the management of DESFA, as a result of decreasing SOCAR’s share in DESFA from 66 to 49 percent.

SOCAR clinched a deal in 2013 to buy a 66 percent stake in DESFA for 400 million euros but faced EU’s anti-trust concerns. The EC Directorate-General for Competition launched an in-depth investigation on the matter in November 2014, then later in January, 2015, four days ahead of Greece’s snap elections suspended its deadline on the check.

Still, SOCAR hopes it can overcome the European Union obstacles, as Italy’s Snam SpA may purchase at least 17 percent of SOCAR shares, which is required so that its stake drops to 49 percent.

Greek MPs stressed that the problems with the privatization of DESFA may deprive the country’s economy of SOCAR’s huge capital injections.

The Greek government would cash in 188 million euros from the deal, while its biggest oil refiner Hellenic Petroleum, which also owns 35 percent in DESFA, will get the rest.

Complicating the sale further, Greece last week tabled a bill stipulating changes the way gas tariffs are calculated retroactively from 2006. The move will contain tariff hikes from 2017, but much lower than expected, potentially hurting the profits SOCAR estimated to get from DESFA when it inked the deal.

Chief Executive of SOCAR Energy Greece, Anar Mammadov met Energy Minister Panos Skourletis to discuss the issue and warned after the meeting that enacting the bill would put the deal at risk.

“If implemented, those changes would reduce the value of the company and its future profitability dramatically,” Mammadov told Greek news website capital.gr, adding that SOCAR would decide how to proceed after a parliamentary vote on the bill.

Should SOCAR indeed drop its bid, DESFA will need to search for another foreign investor that would be able to guarantee its investment strategy since the Greek economy is still weak.


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