DESFA sale delayed; In-depth check launched by Commission

The European Commission has decided to launch an in-depth examination of the yet-to-be finalized acquisition of a majority equity share in DESFA, the Natural Gas Transmission System Operator, by Azeri company Socar. The Commission expressed its concern over the limited level of competition in Greece’s gas market.

Socar has offered 400 million euros for the acquisition of a 66 percent stake in DESFA. No other company has made an offer.

“The Commission is concerned that the agreement may reduce competition in Greece’s wholesale gas market, as it will allow the new entity to prevent Socar’s competitors from accessing Greece’s gas transmission network,” the EU’s executive body announced.

The European Commission faced a deadline until yesterday to decide on whether to approve the deal. Following the announcement of its intention to further examine the sale, the EU executive body now has a further 90 working days, until March 23, 2015, to decide on the DESFA sale.

In its preliminary examination, the European Commission found that the DESFA deal could serve as a disincentive for competitors to access Greece’s natural gas network, including the LNG terminal in Revythoussa, an islet in the Saronic Gulf, close to Athens.

Additional guarantees, to ensure competition in the Greek gas market, are likely to be demanded as part of this new in-depth look.

This latest development will certainly push further into the distance the sale’s completion and the prospective payment of 400 million euros to the Greek state, through TAIPED, the State Privatization Fund, and Hellenic Petroleum (ELPE).

ELPE is selling a 35 percent stake in DESFA, and TAIPED, representing the Greek state, is providing the other 31 percent stake in the gas operator for the 66 percent equity share total being sold. If completed, the deal will stand as Greece’s first major energy-sector privatization.