Greece Expected to Miss 2016 Privatization Target

The agency has repeatedly missed its targets and been hit by series of resignations since it was formed

The Wall Street Journal

By NEKTARIA STAMOULI

Updated Dec. 8, 2015 12:44 p.m. ET

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ATHENS—Greece is likely to miss its privatization target next year, the head of Greece’s privatization agency said Tuesday, even as the agency prepares to make progress on nine asset sales in the next twelve months.

Under the terms of a new bailout agreement signed earlier this year, the Hellenic Republic Asset Development Fund aims to raise €3.7 billion ($4 billion) from asset sales in 2016 and another €1.3 billion in 2017.

“It is possible to approach some €3 billion revenues, but the most certain scenario is that we will manage to get some €2 billion in 2016,” said Stergios Pitsiorlas, head of the HRADF, during a news conference.

The 2016 budget, which was passed by Greek lawmakers on Sunday, forecasts privatization revenues of €1.9 billion in 2016.

The agency has repeatedly missed its targets and been hit by series of resignations. To date, the agency has raised some 3.5 billion euros.

However, Mr. Pitsiorlas said “foreign investors now consider that the period of political uncertainty has closed and the country is entering into a phase of stability.”

He said the agency will “almost finalize” the nine privatization projects that are currently underway during the first half of 2016.

Mr. Pitsiorlas said the €1.23 billion sale of a long-term operating license for 14 regional airports to Fraport and a Greek consortium partner will be concluded in ten days time.

It will be the first privatization deal since the left-wing government won a second round of national elections in September. The German airport operator won the bidding process for a 40-year operating concession of the airports in November 2014, but the deal was initially frozen by the Syriza-led government, when it first won elections in January.

“It is important that Syriza courageously included a detailed privatization plan in its pre-election campaign,” Mr. Pitsiorlas said. “The government is now firmly committed to its implementation.”

The head of HRADF said that Belgium’s Fluxys and Italy’s SNAM had expressed interest in buying Greece’s state-owned natural gas operator DESFA.

He also said that the issuance of the tender for the privatization of the port of Piraeus has been postponed for another week until Dec. 21. China’s Cosco and Denmark’s A.P. Moeller Maersk are interested in the country’s main port.

Other privatization project include the Thessaloniki Piraeus Port, the development of the old Athens airport plot at Elliniko, the Astir Palace Resort in Vouliagmeni, the state plot at Afandou on Rhodes island, the sale of railway companies TRAINOSE and Rosco and a stake in Athens International airport.

Under the up to €86 billion euros deal Greece struck with international creditors in August, the country has to set up a new privatization fund and use its assets to generate 50 billion euros in the coming years.

The country has to finalize the structure and the management of the new fund this month, as part of a second set of reforms it needs to implement to unlock the next slice of financial aid.

Mr. Pitsiorlas said the new fund is expected to be set up by April 2016. The majority of the management will be made of Greek as well as officials and representatives from the lenders.

Write to Nektaria Stamouli at nektaria.stamouli@wsj.com