DESFA revision adjustments expected, Azeri ambassador tells

Azerbaijan’s ambassador to Greece Rahman Mustafayev has relayed the discontent felt by Azeri officials over the Greek government’s recent revenue-restricting revisions for DESFA, Greece’s natural gas grid operator, in an interview with Greek weekly To Vima.

Azeri firm Socar agreed to purchase a 66 percent majority stake in DESFA after emerging as the winning bidder of a tender completed in 2013. However, the deal’s finalization, now appearing highly unlikely, has been delayed by a series of moves including European Commission intervention demanding that Socar surrender 17 percent of the DESFA stake to a certified European operator and, most recently, a Greek energy ministry amendment that severely reduces DEFSA’s leeway for network usage hikes and, by extension, the operator’s revenue potential.

Mustafayev, in the Greek newspaper interview, described the ministry’s move as “unprecedented”, noting that it makes the acquisition of a stake in DESFA unfeasible. “Socar has not been treated in such a way in any other country where the company is active,” Mustafayev was quoted as saying by To Vima.

The ambassador noted that, even so, Socar remains interested in the DESFA deal, adding that he hopes the privatization can be swiftly completed. “The operator’s market value has been reduced and the risk level has increased, which is why we expect specific moves from the Greek side in order to cover the damages caused,” Mustafayev said.

Pundits firmly believe that the negotiating sides are playing for time until the end of September, when a letter of guarantee provided by Socar expires.

Socar is legally entitled to withdraw from the sale as two years have elapsed since the tender ended. The Greek government, which inherited the DESFA sale from the country’s previous administration, has admitted its preference for an alternative DESFA sale plan, based on the IPTO (power grid operator) sale now in progress.

If this latter procedure proves successful, a 51 percent stake of IPTO will be transferred from parent company PPC, the main power utility, to the Greek State, 24 percent of the operator will be acquired by a strategic investor, and the other 25 percent will be sold through the bourse.