A target set to sell a 66 percent stake of DEFSA, the natural gas grid operator, by the end of this year through an international tender appears to have little or no chance of being achieved.
Even if TAIPED, the state privatization fund, were to soon set a deadline for binding second-round offers, the three or so months remaining until the end of the year would most likely not suffice for the completion of all procedures needed to complete the sale and add its amount to 2017’s privatization tally.
Procedures needed following the declaration of a preferred bidder include endorsement by the European Commission and a Supervisory Council, as well as the signing of a final agreement between the buyer and seller.
Assuming that time has run out for these stages to be completed within 2017, the privatization amount to be raised by the DESFA sale will need to be added to next year’s target figure for privatizations, set at 2.5 billion euros as part of the revised bailout agreement.
The energy ministry delayed its announcement of the new DEFSA tender – required following last year’s unsuccessful outcome of a previous long-running sale effort – as it needed to wait for the bailout’s prolonged second review to be completed.
Though preliminary talks concerning the latest DESFA tender began in March, it was not officially launched by TAIPED until late June. An initial deadline for non-binding offers, set for July 24, was extended to August 7 to facilitate the late interest of a Greek-American investor.
Ultimately, just two bidding formations from a starting field of six – one comprised of Italy’s Snam, Spain’s Enagas, Belgium’s Fluxys and Dutch operator Gasunie, and the other, Regasificadora del Noroeste, a Spanish entry bidding alone – ended up qualifying for the tender’s second and final round. Officials were hoping for more second-round qualifiers as this would have increased the probability of fiercer bidding and a higher selling price.
As things have turned out, both the end-of-year completion target and hoped improvement on the 400 million euros offered for 66 percent of DESFA by Socar, the winning bidder of the previous DESFA tender, are in jeopardy.