Last Minute Upturns in Greek Gas Privatization Marathon
The Greek natural gas privatization process has turned into a corporate marathon after further last-minute delays and a change in significant agreement clauses for the companies involved.
The Greek government lifted the clause after intense lobbying by Gazprom that stipulated that the winning company will have to submit a 20 percent non-refundable deposit. The Russian side feared that eventually the EU competition Commission would ultimately reject them as winners and they would lose a substantial amount of their €900 million bid for DEPA, which amounted to around €180 million. The final Sale & Purchase Agreement (SPA) document has further changes that will most certainly assist Gazprom's role in the competition.
Furthermore, the new deadline for the competition has been extended to May 10th from April 29th. Under the new clauses, TAIPED, Greece's agency for privatizations, will have the capability to ask for a letter of Good Performance Guarantee and also will be able to keep a "penalty" fee in case the winner of the competition eventually backs off. This amount will be maximum 5 percent of the binding offer and in a wort case sceniario, would mean Gazprom stands to lose in €45 million, but only because of its own initiative and not because of a 'third party interference'.
Another interesting development is the guarantee that TAIPED and consequently the Greek state gave regarding the debts electricity producers and the market owns to DEPA, currently estimated at €600 million. Under the new terms, code named Independent Power Producers (IPP) Receivables, TAIPED guarantees the debts until the new owner assumes management of the company. After that the winner is able to manage negotiations by himself whether he is able or not to collect the debts.
Additionally, Gazprom has in the past month requested and finally achieved a TAIPED signature for a Euro Clause stating should Greece exit the Eurozone in the future, the deal is off and the capital invested has to be returned back to the bidder.
The Greek Prime Ministerial office of the Premier Antonis Samaras, according to all reports, has taken the matter under personal management and pushed forward these last-minute changes that are actually aimed at keeping Gazprom's interest for the competition. Despite several attempts to entice the French GDF and Italian companies, it was proven that only Gazprom had a special interest for DEPA.
Regarding DESFA's future, the above rules apply to that company, along with Sintez, who has also submitted the largest bid. Concurrently, Azeri interest through SOCAR remains strong and the Ambassador of the country in Greece, Rahman Mustafayev, relayed to local media SOCAR's steadfast interest, coupled with the expectations for the opening of the Southern Corridor and prospective deals for direct sales from the Shah Deniz field to the Greek market. The Ambassador also discussed the excellent prospects of the Trans-Adriatic Pipeline (TAP), although he mentioned that apart from the technical and commercial aspects of any pipeline project, political considerations also weigh heavily, a hint towards the importance of Nabucco West in geopolitical terms. The Greek-Azeri trade relations in general have been boosted lately and Baku is increasingly eying the entire Balkan market for future gas deliveries.
Overall, culminations regarding the natural gas sector in Southeastern Europe seem to be settling down, with Moscow and Baku making inroads, and being able to exercise clout through their status as producers and major traders of gas.