Greek state firms could be investors' poison

19:20 2/6/2011 - Πηγή: Ksipnistere

Having failed to sell a single cent's worth of assets since getting a 110-billion euro EU/IMF bailout last year, Greece has pledged to speed up privatisations to convince its increasingly exasperated lenders it is still serious about the rescue plan.

But unless it makes some tough choices in the run-up to the sales, such as higher power

prices or allowing redundant staff to be fired at former state firms, Greece may fail to attract investor interest to raise the intended 50 billion euros....

"If things don't change, state companies will be impossible to sell or they will go at just 10 percent of their value," said Stefanos Manos, a former finance minister and author of a hugely successful privatisation of mobile telephony in the 1990s.

The European Union and IMF are pressing Greece to conduct large-scale privatisations to raise funds for reducing its huge debt.

They want Athens to follow the example of Macedonian King Alexander the Great, who in ancient times solved the apparently intractable problem of the Gordian knot by slicing through it with one stroke of his sword.

Greece may face a far more laborious task.

Unpalatable choices

Workers at several companies slated for privatisation are virtually unsackable, owing to protective labor rules dating from monopoly days -- off-putting for investors who might need to wield the axe to squeeze out a profit.

Germany's Deutsche Telekom, which already owns 30 percent of former telecoms monopoly OTE, may use the labor issue as a lever to agree to buy the state's remaining 16 percent stake. Deutsche Telekom has already written down 900 million euros of its 3.8 billion euro OTE investment.


Some analysts say it is not realistic to think that Greece will be able to sell stakes in state-controlled lenders Postal Savings Bank and ATEbank, which are up to their necks in toxic Greek government bonds.

"No foreigner will come in and touch that unless the portfolio is written down by at least 50 percent," said Tania Gold, a banking analyst at UniCredit. "I don't see how a foreign bank would justify that to their shareholders."

Greece also faces unpalatable choices if it is serious about finding a strategic partner for its biggest power producer PPC, in which it wants to sell a 17 percent stake.

Before investors dare dip a toe into Greece's energy market, the government will have to stop regulating household electricity prices, which are among the lowest in Europe.

Greece has also yet to explain how it will comply with an EU order to scrap PPC's monopoly over production of coal, the country's cheapest energy source. Also unclear is how PPC, one of Europe's heaviest polluters, will cope with about 1 billion euros a year in extra carbon costs from 2013.

"Visibility for investors is currently zero," said Paris Mantzavras, an Athens-ba