Prospective investors looking to take part in Greece’s renewed tender offering a 66 percent stake of DESFA, the natural gas grid operator, have requested additional guarantees, presumably driven to do so by the eventual collapse of the previous tender for which Azerbaijan’s Socar had been declared the winning bidder before revenue-limiting measures imposed on the operator by the country’s then-energy minister played a key part in the sale procedure’s derailment.
Interested investors have requested additional guarantees so as to avoid any unpleasant legal framework surprises down the road such as those experienced by Socar when Panos Skourletis, the energy minister at the time, introduced measures limiting DESFA’s earning potential.
Guarantees demanded by the prospective bidders include an assurance that DESFA’s tariff levels and weighted average cost of capital (WACC) will remain unchanged until 2022. This demand clearly indicates the impact of the first DESFA tender’s developments on the follow-up sale attempt.
The investors also want further specification of terms concerning a recoverable amount of 350 million euros to be demanded from DESFA through tariff charges over a 20-year period. This demand is also linked to Socar’s bad experience.
Overall, potential investors are demanding absolute clarity on DESFA’s future operating conditions before any offers are made.
The new DESFA sale attempt has developed into a challenge of political dimensions for the Syriza-led coalition, whose moves proved instrumental in killing the initial sale attempt, launched by the country’s previous administration. The new tender will need to fetch more than the 400 million euros offered by Socar for DESFA’s 66 percent if it is to be branded a success.
The level of offers to be made by prospective investors will be determined by the level of clarity provided by Greek authorities on DESFA’s future operating terms.
Just days ago, a first-round deadline for non-binding offers was slightly extended to August 7 following the late emergence of an unidentified Greek-American investor who has expressed an interest in DESFA.
Belgium’s Fluxys and Dutch network operator Gasunie are expected to team up for a joint offer, while Italy’s Snam, possibly backed by a fund, is also regarded as a certainty. Spain’s Enagas also appears to be gearing up to join the list of interested parties.