Monday, December 14, 2015

Greece privatizes island airports in €1.2bn deal

Greece has signed a €1.2bn deal transferring control of 14 regional airports to a German operator, in a striking reversal of the Syriza government’s previous tough stance against privatization.

Fraport, the Frankfurt airport operator, and Copelouzos, a private Greek contractor, were awarded a 40-year concession last year to upgrade and operate a cluster of neglected island airports that handle some two-thirds of the country’s tourist traffic.

The deal marks the biggest German investment to date in Greece and is the first large infrastructure project to be completed by Taiped, the country’s privatization agency.

Final negotiations with Fraport were frozen after the leftwing Syriza came to power in January amid a wave of anti-German sentiment over Berlin’s perceived support for implementing harsh austerity policies in Greece.

Amid deep ideological opposition within the party, Syriza initially pledged to cancel disposals of infrastructure and state-owned utilities agreed with creditors.

But the airports deal was among a handful of projects revived by Alexis Tsipras, prime minister, as a sign of Greece’s commitment to staying in the eurozone.

Stefan Schulte, Fraport chief executive, on Monday called the deal a “win-win” for “Greece and its people”.

“The project underscores the extensive know-how that Fraport will be able to provide at these 14 aviation gateways which are vital for Greece’s economy and, in particular, its huge international tourism sector,” he said.

Since seeking a rescue from international lenders in 2010, Greece has consistently fallen short of its promises to sell off as much as €50bn in state-owned assets.

The leftwing government’s misgivings about privatization were evident on Monday, with hard-left transport minister Christos Spirtzis saying he signed the concession agreement “with a great deal of pain”.

“I still disagree with the way in which these airports have been transferred ... there are terms [in the agreement] that should have been corrected,” Mr Spirtzis said.

Fraport said ownership of the 14 airports, which handled 22m passengers last year, would be retained by the Greek government throughout the concession term.

On top of the initial payment of €1.2bn next year, the Fraport-Copelouzos partnership will pay Greece an annual operating fee of €22.9m and also invest €330m in airport infrastructure by 2020.

Stergios Pitsiorlas, chairman of Taiped, said the signing of the concession sends “a strong message to everyone that the Greek economy is gaining the confidence of markets and re-entering the path of development”.

Wrapping up the airport deal opens the way for two more much-delayed infrastructure projects to be awarded to strategic investors in the next three months, according to Mr Pitsiorlas.

These are the sale of a majority stake in Piraeus port, seen as a transit hub for international container-handling groups, and in the Greek state railways organization, which links Piraeus with central and northern Europe.


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