ATHENS – Plans by the Greek government to sell companies that handle the key resources of energy and water face serious obstacles and its policy to offer investors exceptional privileges in an effort to boost interest in privatisation is coming under strong pressure.
Privatisation is one of the ‘prerequisites’ of the Troika – the tripartite committee led by the European Commission with the European Central Bank and the International Monetary Fund – in exchange for additional bailout money that Greece is seeking to continue to avoid insolvency.
The Greek government recently announced plans to sell a 30 percent share of its Public Power Corporation (PPC), and create a new ‘Small PPC’, which will be sold to private investors.
The new company will take with it some key production sites, lignite mines, and hydroelectric and natural gas units. In addition, about two million customers will be transferred from the original company and will be obliged to receive services from the new company for six months.
The lucrative terms and assets accompanying the new company, described in the legislation that creates it, are already attracting many local investors as well as major foreign energy companies like Germany’s RWE as well as the French EDL and the Italian ENEL.
The plan has caused strong reactions in north-western Greek cities where communities depend heavily on employment created by PPC mines and electricity production plants. PPC unions decided to take strike action to protest the privatisation plans, but these were declared illegal. The Greek opposition has called for a referendum on the issue but it appears unable to gather the 120 signatures of members of parliament necessary for it to go through parliament.
Kriton Arsenis, an independent Member of the European Parliament, has asked the European Commission whether obliging customers to receive services from the company constitutes an illegal state subsidy. In response, European Commissioner for Energy Gunther Oettinger said that the Commission “does not have adequate information to deliberate on whether this constitutes illegal state subsidy”.
At the end of March, Arsenis submitted a similar question concerning the Hellenic Republic Asset Development Fund (HRADF), which has been set up to manage Greek privatisations, and met with a similarly evasive answer.
The HRADF has announced the sale of 100 percent of Hellinikon SA – which administers 6,200 acres of land occupied by the former Athens Airport of Hellinikon – to Lamda Development.
Arsenis pointed that Article 42 of Law 3943/2011 establishing Hellinikon SA states that the company “shall be exempt from any tax, duty or fee, including income tax, in respect of any form of income derived from its business, of transfer tax for any reason, and capital accumulation tax” and again asked the Commission whether this unjustifiable tax exemption constituted state subsidy.
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