Greece’s long-running attempt to sell a 66 stake of DESFA, the natural gas grid operator, to Azerbaijani energy company Socar and Snam, its eventual Italian partner in the deal, has officially ended without a result, the energy ministry announced tonight.
“In recent months, the government has been engaged in continuous discussions with representatives of Socar and Snam for the sale of 66 percent of DESFA. The climate of these discussions was constructive. However, the proposal tabled by the candidate buyers for a price reduction was legally impossible and would have nullified the tender,” the energy ministry noted.
The energy ministry also noted that various alternatives proposed by the candidate buyers, their intention being to improve the operator’s commercial potential, were examined but could not be implemented to the sale’s existing framework.
“The ministry’s proposals sought to improve the operator’s financial position by offering an increase to the recoverable amounts [for past investments],” the ministry announced. “These proposals were not accepted, and, as a result, the negotiations concluded.”
Socar was named the winning bidder of an international tender offering a 66 percent stake of DESFA in 2013, under a preceding conservative New Democracy-led coalition for which Yiannis Maniatis of the socialist PASOK party, the government’s junior partner, was in charge of the energy portfolio. At the time, the energy minister signed an agreement with Socar president Rovnag Abdullayev for the transfer of DESFA’s 66 percent – 31 percent from TAIPED, the State Privatiation Fund, and 35 percent from ELPE (Hellenic Petroleum) – to Socar.
The European Commission eventually intervened over competition concerns and forced Socar to surrender at least 17 percent to a certified European operator, prompting Snam’s entry into the ordeal.
Negotiations concerning the deal’s details further delayed the sale and then, last summer, the recently replaced energy minister Panos Skourletis struck a devastating blow by implementing measures that severely limited DESFA’s revenue potential. This development was negatively received by the candidate buyers, who sought a price reduction, and ultimately drove the long-running sale attempt to tonight’s demise.
In the lead-up, Socar kept the process alive by offering two successive one-month extensions to the agreement’s deadline, which was originally due to expire on September 30 – all to no avail.