An Example Of Why The Asset Sales Will Be Slow In Coming !

http://www.athensnews.gr/issue/13483/53448

Gas network split delays selloff

by Dimitris Yannopoulos 19 Feb 2012

A DEPA gas installation The European Commission’s insistence that Greece “unbundles” its natural gas system management from that of its domestic gas transmission has delayed the privatisation of the two state-owned enterprises in the sector, the Public Gas Corporation (DEPA) and the Natural Gas Nationwide System Operator (DESFA).   In separate meetings on February 15, the main stakeholders in the combined assets of DEPA and DESFA - namely the Greek state and Hellenic Petroleum (ELPE) - gave their respective boards the go-ahead for a memorandum of understanding with the Hellenic Republic Asset Development Fund (TAIPED), Greece’s privatisation agency.   The signing of such a memorandum will launch procedures for the separate sale of the two natural gas operators. The state controls 65 percent of DEPA, while ELPE holds the remaining 35 percent of its shares.   The aim was to privatise 100 percent of the Greek natural gas network by the third quarter of 2012 after failed efforts in this direction in 2011.   Delaying tactic   “After months of procrastination due to the dispute over a separate or joint sale of DEPA and DESFA, there is still a long way to go before the asset valuation of the two enterprises can pave the way for the completion of a public tender,” said engineer Kostis Stambolis, who heads the Institute of Energy for Southeast Europe (IENE).   Although the new economic policy memorandum ratified by parliament on February 12 calls for the privatisation of natural gas facilities by the third quarter of 2012, “a book-value reassessment by accredited auditors of the Energy Regulation Authority (RAE) of the two gas operators may take a bit longer than the prospective buyers were hoping”, Stambolis told the Athens News. He noted that the privatisation of the natural gas sector cannot be completed before November.    The medium-term budget plan for 2012-2015 by the troika (EU, IMF and ECB) included the requirements of the EU’s Directive 2009/73/EC on the promotion of competition in the natural gas market. The directive stipulated that the separation of the independent gas system operator (ISO) and independent transmission operator (ITO) should be enacted prior to privatisation.   But Energy and Environment Minister Yiorgos Papakonstantinou decided to reverse this procedure last summer by issuing a ministerial decree that allowed for the sale of DEPA as a single enterprise, with DESFA as its distribution subsidiary. The decree did not rule out a separate privatisation of the two operators.  “It is obvious that strong business interests have lobbied for the joint privatisation of the two state operators, although the government also had an interest in fetching a higher price for the DEPA group,” Stambolis said.    Lost monopoly   Scrambling to raise cash for debt servicing in a declining local energy market, the government was hoping to receive more substantial offers for a fully-fledged local monopoly operator of natural-gas imports and wholesale distribution. According to reports from TAIPED in the last couple of months of 2011, there was intense activity around the prospective sale of DEPA, and stakeholders were in constant contact with the privatisation fund.    But Stambolis said that the change of direction in the process of selling DEPA was a result of interventions by the European Commission earlier this year which alerted its troika partners of EU regulation which Greece had failed to comply with in its 2011 plans to privatise DEPA separately.    The troika then reiterated its demand for a separate sale of the ISO and ITO firms in the policy priorities of the “memorandum of understanding on economic policy conditionality” for the country’s second bailout programme.   Although DESFA has been operating as an independent gas distributor in the domestic market, now the ministerial decree that permits the joint sale with DEPA must be revoked and a new law enacted in its place.   At the same time, DESFA’s independent corporate consolidation must be accredited by a time-consuming audit under the auspices of RAE, which is bound to further delay the privatisation process beyond the second quarter of this year. The principal candidates for the privatisation of DEPA and DESFA include a few of Europe’s biggest energy groups such as Gazprom, Socar, GDF Suez and Botas.