The basis for Greece’s latest bailout agreement, the third in five years, includes the establishment of a super-fund for long-term sales of state assets, possibly energy companies as well, its objective being to service the national debt, recapitalize banks, and finance investments.
At this stage it appears the fund will be established through the sale of bank subsidiaries and shares, state-owned property, state companies, as well as prospective earnings of tenders offering hydrocarbon exploration and exploitation rights for offshore and onshore blocks.
The fund’s aim, as revealed yesterday by Austrian chancellor Werner Faymann, will be to raise 50 billion euros through privatizations over a 30-year period. Of this total amount, 25 billion euros will be used to service European Stability Mechanism (ESM) costs for the recapitalization of Greek banks. The plan for the fund also entails evenly splitting the other 25 billion euros to service national debt (12.5 bn euros) and finance investments (12.5bn euros). The fund will be based in Athens and controlled by the Greek government under strict European Commission supervision.
Faymann explained that the privatizations will take place over a long-term period to avoid selling at depreciated costs amid the crisis.
Although details concerning the fund’s asset make-up remain unknown at this stage, it is expected, based on current estimates, to be supported by three key pillars.
The first will include bank assets, such as property and bank subsidiaries, both in Greece and abroad, according to comments offered yesterday by German chancellor Angela Merkel. Emphasis will be placed on the network of Greek bank subsidiaries in southeast Europe, including the National Bank of Greece’s Financbank in Turkey.
The existing TAIPED State Privatization Fund and its hundreds of small and large-sized properties, stakes in state-run companies, as well as infrastructure such as ports, airports, amd marinas, will, based on current plans, serve as the new super fund’s second main component. It remains unknown whether energy companies such as the main power utility PPC and DEPA, the Public Gas Corporation, will be included here, though this is not out of the question.
The fund’s third main component, according to reports, will consist of future earnings to be raised by hydrocarbon exploration and exploitation rights offered for offshore and onshore blocks.
The coalition’s main party, Syriza, had announced a plan to establish a fund for hydrocarbon-related revenues several months ago. Like previous Greek governments, the coalition envisaged fashioning a fund based on the Norwegian model, which supports social welfare policies through oil and gas revenues. However, the latest plan is entirely different and entails using hydrocarbon earnings to directly service national debt, recapitalize banks, and finance investments.