Government Announces Investment Opportunities in State Assets

Government Announces Investment Opportunities in State Assets

On June 2, 2010 the government reiterated its invitation to foreign and domestic groups to invest in the country through an ambitious programme of privatisations, flotations and the selling of public real estate assets, aimed at collecting three billion Euros in the next three years. The sum, in fact, is cited in a memorandum signed between the Greek state, the EU and the IMF.

In a joint press conference, the Ministers of Finance, George Papaconstantinou; Infrastructure and Transports Dimitris Reppas; Environment, Energy and Climate Change Tina Birbili; and Tourism and Culture Pavlos Geroulanos announced the government’s decision to speed up procedures to exploit the country’s assets with the aim to achieve economic restructuring and growth.

Assets available to investors are in the sectors of transport (Hellenic Railways, ports, airports), water and sewage (Athens Water, Thessaloniki Water), energy (PPC, Hellenic Petroleum), telecommunications (OTE), gaming (OPAP, casinos), project concessions and real estate (Olympic projects, tourism assets).

A priority for this year is Hellenic Railways (OSE) and gaming, and other assets will be examined depending on market conditions. Regarding Hellenic Telecoms (OTE), the government plans to change its board and then discuss any plans for an additional equity sale to Deutsche Telekom. On OPAP, the government does not plan to reduce its equity stake in the organisation, and regarding PPC the state will maintain its 51 percent controlling stake.

Regarding debt-ridden Hellenic Railways, the state plans to sell 49 percent of TRAINOSE—the operator of railways—to strategic investors, along with management control. Cancelling loss-making lines, restructuring of its personnel base, and efficient management of the rail provider’s real estate assets is also foreseen. The government also plans to separate cargo from passenger operations.

On the ports of Piraeus and Thessaloniki (the state has a 74 percent controlling stake in each organisation) and 10 regional ports, the aim is to create one or more expanded corporate entities, followed by strategic partners, and then a listing on the stock exchange with the state holding at least 51 percent.

For the Athens International Airport the government will seek expansion of a concession contract and to list the company’s shares on the stock exchange. Regional airports will be operated with concession contracts to strategic investors.

The government will sell a 23 percent equity stake in the Thessaloniki Water Company and a 10 percent stake in the Athens Water Company; a holding company will be set up including all water companies in Greece.

The government will sell a 39 percent equity stake in Hellenic Post and for the Public Power Corp (the state owns 51 percent). The government plans regulatory interventions to open up the whole sale and retail energy markets. The government will maintain an existing strategic participation in Hellenic Petroleum and Hellenic Telecoms.

All state-owned casinos will be sold and a plan was unveiled to merge all real estate companies owned by the state. (Source: ANA MPA)

Integrated Solutions to Lead the Way

Greece is embarking on a long-term plan to overhaul its waste management practices. New technologies are needed to deal with an increasing burden of waste and that meet the demand for disposal, energy generation, recycling, and building new, closed-loop systems that limit waste generation.

According to EU directives, all Member States, including Greece, should recycle 55-80% of packaging material by 2011 and decrease organic urban waste by 25% through composting processes at source by 2010. This should increase to 50% by 2013 and 65% by 2020.

Since there is insufficient domestic capacity to meet the needs of the market, investment opportunities are exceptional. The Greek government, local waste management authorities, and private waste management service companies need the expertise of foreign firms to fill this significant gap.

Advantages of Investing in Waste Management

•Binding EU commitments to recycle packaging material and other products, and decrease biodegradable waste and other urban solid waste that is sent to landfill

•Insufficient local capacity; foreign expertise is required

•Solutions needed to deal with an increasing waste burden

•Integrated waste management facilities are needed

•Need for innovative solutions that create energy from waste

•Favourable Public-Private Partnership (PPP) and EU financial framework

Investment opportunities in waste management are exceptional. The expertise of foreign firms to meet the demands of the local market is a necessity since domestic capacity to meet this need is insufficient.

Greece produces more than 5 million tons of residential and commercial urban waste annually. This is equivalent to 455 kilograms per person. The region of Attica produces almost 39% of Greece’s urban waste, followed by the region of Central Macedonia (16%) and the city of Thessaloniki (9%).

Contributing to the increasing amounts of urban waste are the growth in tourism, increased urban development, a shift in living standards, and a change in consumer habits and behaviour.

The quest for more efficient waste management has led to recycling programmes in a number of municipalities, and although these initiatives have shown increased participation and promising results, the demand for more comprehensive and effective programs remains.

In 2008, 525,000 tons of packaging material were recycled/recovered from a total production of 1,050,000 tons. A total of 19 centres for sorting and recovery were established in Athens, Thessaloniki, Heraklion, Chania, Kalamata, Patras, Zakynthos, Schimatari, Lamia, Karditsa, Corfu, Katerini, Magnesia, and Ioannina.

The ten recycling systems throughout Greece today deal in packaging material, vehicles, tires, lubricants, batteries, and electrical and electronic equipment. Currently, 15 companies deal in the management of hazardous waste.

The authority responsible for the planning and implementation of alternative waste management in Greece is the National Organization for the Alternative Management of Packaging Materials and Other Products (EOEDSAP) of the Ministry of the Environment, Energy and Climate Change.

Targeted Opportunities

Opportunities for investment and cooperation may be identified in a number of areas:

•Selective collection at source and the recycling of municipal waste

•Collection and treatment of various products and materials, including batteries, tires, waste oils, and electrical/electronic products

•Creation of disposal facilities for municipal waste

•Construction of transfer station networks, recycling centres, sanitary landfill sites for residual waste; mechanical, processing and compost units; rehabilitation of existing landfill sites

•Implementation of integrated waste management systems and solutions in specific regions

•Management of clinical and hazardous waste

•Implementation of coastal rehabilitation projects

•Supply of mechanical equipment and know-how that suits the local environment

Other areas where investment is needed include innovative technologies for asbestos removal, treatment and disposal; physiochemical treatment of liquid industrial waste, waste minimisation techniques for industry, and sewage sludge processing with energy recovery.

Waste to Energy

A highly promising area is technology to transform waste to energy. Investors may cooperate with Greece’s research and technology institutes and councils to develop effective solutions that foster sustainable development.

Existing Waste to Energy Facilities

Currently, Greece operates two waste to energy facilities, one in Athens, the capital of Greece, at the Ano Liosia Hygenically Controlled Landfill and one in Thessaloniki, the second largest city of the country, at the Tagarades Hygenically Controlled Landfill. The Ano Liosia facility produces heat and power from biogas and has an installed capacity of 23.5 MW. The Tagarades power plant produces electricity from biogas and has an installed capacity of 5 MW, capable of covering the energy needs of 80,000 residents.

Composition of Urban Waste in Greece

Source: Ministry of the Environment, Energy and Climate Change

Source: Ministry of the Environment, Energy and Climate Change

Greece’ s Investment Incentives Law governs the terms and conditions of direct investment in Greece and provides for the incentives available to domestic and foreign investors, dependent on the sector and the location of the investment. The Ministry of Economy, Competitiveness and Shipping has suspended Law 3299/2004 effective 29/1/2010 and, in cooperation with the relevant Ministries, is proceeding to reevaluate the legislation. After a process of open discussion with bodies and organisations of the main sectors within the economy, the Ministry will reform the Investment Law to render it a major driver of a new development model, which will incorporate green development as a priority component