Socar appears willing to accept reduced 49% stake in DESFA

Azeri energy company Socar appears prepared to accept acquiring a reduced 49 percent share of DESFA, Greece’s natural gas grid operator, rather than the 66 percent share originally planned in an agreement stalled by the European Commission for inspection over EU energy and competition concerns, latest developments indicate.

A series of recent meetings between top-ranked figures at TAIPED, Greece’s State Privatization Fund, and both Socar and European Commission officials has generated a sense of optimism that an agreement may soon be struck following months of diminished hope.

Officials are now believed to be examining whether the international tender launched for the sale would remain legitimate if the DEFSA equity share to be sold is revised.

The sale of a 49 percent share of DESFA would be expedient for the Greek government as such an outcome would be presented as avoidance of selling a majority stake in the company, reflecting the ruling Syriza party’s pre-election privatization model. It would also suit the European Commission which is troubled by the prospect of allowing a majority stake in an EU energy company to be passed on to a non-EU corporation.

Greece’s effort to sell DESFA was stalled by the European Commission last November, when it launched an investigation into the deal to examine whether the acquisition of a majority stake by the Azeri company complied with EU law. The probe was suspended in January and the reaction by Azeri officials to the saga has since been negative.

Socar officials even went as far as to make public comments that clearly expressed their disappointment over the sale procedure’s delay.

Economic conditions have deteriorated both in Greece and Azerbaijan since two years ago, when Socar submitted a 400 milion-euro offer for a 66 percent stake in DESFA.

The matter may have cleared up by the end of August. The international tender had included a clause offering a two-year period for the completion of a deal. This period expired in June, but a two-month extension had been secretly arranged following last January’s snap elections in Greece.

Information gained from the European Commission’s probe suggests that the EU executive body has recommended the inclusion of a European company into DESFA’s equity make-up.