New Greek government pins hopes on privatisations

Greece's new government formally takes office this week and looks set to push privatisation so as to win favour and funds from EU-IMF creditors who are inspecting the country's strained finances. The solvency of Greece ultimately depends on the team of European Union and International Monetary Fund auditors whose findings will help determine if the second 130-billion-euro rescue of Greece will continue. The Greek economy is in its fifth year of recession and the new conservative led government says the situation is even worse with a contraction in 2012 now expected to be 6.7 percent, according to a study, twice as bad as forecast. To fight the gloom, the coalition government of Prime Minister Antonis Samaras is looking to mass privatisations in the hope of persuading creditors that Greece remains on the right path and is ready to join the world economy. "All these years, Greece tried its best to avoid foreign investment," Notis Mitarachi, deputy minister of development, said this week. "We need to change all these things." Parliament convenes Friday when Samaras presents his programme, followed by two days of debate culminating with a confidence vote late Sunday. Samaras set the tone in a letter Friday to his EU colleagues vowing to meet bailout conditions through a "special emphasis on the privatisation agenda." Ports, airports, former Olympic sites, the power utility -- when it was first launched in 2010 as part of Greece's first bailout, hopes were that the privatisation drive would raise 50 billion euros ($63 billion). But the plans quickly stalled, stymied by angry lobbies, powerful unions and most recently, the lack of government during a two-month electoral process that finally ended June 17 with victory for Samaras' conservative New Democracy. "Too much time has been wasted," warned Costas Mitropoulos, the chief executive of the Hellenic Republic Asset Development Fund, the entity charged with selling off some of the state's choice assets. Solving the crisis "has to be linked to immediate and swift action," he urged at a business conference this week, calling on the new government to boldly revive the process. According to the fund, 28 privatisation projects are underway and the revised goal of raising 15 billion euros by 2015 is feasible as long as demand is there. But the government must move at a pace as yet unseen in Greece, Mitropoulos said, with 72 ministerial rulings needed to execute decisions already made and 13 legal fights between the fund and the state requiring settlement. The crown jewel in the privatisation drive is Hellenikon, the site of the 2004 Olympic games and former Athens airport where developers want to build luxury homes and a marine park, though plans often change. Mitropoulos said Hellenikon has attracted interest from nine major construction groups and argued the project would add 0.3 percentage points to Greece's gross domestic product annually in addition to creating 15,000 jobs. The privatisation of PPC, the national power utility the EU wants broken up, has proved especially troublesome, opposed bitterly by a powerful union. There are opportunities in oil and gas too, with Greece looking to sell exploration rights, though separately from the privatisation drive. Reports Tuesday said eight bids have been received for gas exploration in Western Greece. But despite the hopes and with Samaras meeting the heads of the EU-IMF audit teams on Thursday, it is not at all certain that the privatisation gambit will be enough to calm the country's creditors -- something the government says it understands. "We must move forward with privatisations and not each time find reasons to block them," incoming government spokesman Simos Kedikoglou, told Real FM radio Wednesday. "The government must show results not only to Greece but to Europe as well."