June 19, 2024

Greece Pushes Plan to Raise Cash With Big Sales

ATHENS — The Greek government, under pressure from its foreign creditors to raise money by privatizing state enterprises, is facing fierce opposition to its proposed sell-offs from powerful labor unions and critics within the governing Socialist party itself.

No islands or beaches are up for sale, despite the persistent, usually snide suggestions from abroad that have riled many Greeks.

Still, the program that is expected to go before Parliament next week is ambitious. It would authorize the selling of stakes in three utilities: the Greek railway, the race track and the national lottery. Also up for sale or lease are assets including disused venues built for the 2004 Olympic Games and the site of the capital’s former airport, which the government of Qatar has expressed an interest in developing.

In all, the government hopes to raise 50 billion euros, or $72 billion, by 2015 to help avert a default on the country’s huge debt, although many analysts consider that figure to be overly optimistic. By pressing ahead, the government is seeking to demonstrate its resolve in meeting the terms of its 110 billion euro bailout, even as the rating agency Standard Poor’s issued another downgrade on Monday and as European officials discuss ways to relieve some of the debt load.

Indeed, representatives of the International Monetary Fund and the European Union are back in Athens to decide whether to release the next installment of the emergency loan package, estimated to be 12 billion euros. The fact that the Greek budget deficit for 2010 was revised upward, to 10.5 percent of gross domestic product from an estimated 9.5 percent before, suggests that inspectors will be particularly strict this time.

The government insists the privatizations will not be derailed.

“Commentators have doubted the Greek government’s resolve at every juncture of the crisis and in each case the government has proven them wrong,” George Petalotis, a spokesman for the government, said in an e-mailed statement.

The Greek labor unions, however, are determined to stop the sales, fearing that private ownership will lead to downsizing and job cuts. They are lining up a barrage of protests, starting with a one-day general strike on Wednesday.

At the front line is Genop, the union representing workers at P.P.C., the state electricity company. Genop has threatened rolling strikes that could cause lengthy power cuts across the country just as the summer tourist season kicks off.

Speaking Friday in Parliament, Prime Minister George Papandreou promised that Greece “will not give up control of P.P.C.,” even though it was seeking to reduce its stake to 34 percent from 51 percent. He also insisted that the sale would not be done at a “bargain basement price.”

But skepticism lingers at all levels of the governing Socialist party, known as Pasok, particularly about privatizing the power company. Tina Birbili, the energy minister, recently told Ta Nea, a center-left daily, that it was premature to talk about privatizing P.P.C. as its share price was undervalued. It is currently trading at around 11 euros, compared with a five-year average of more than 17 euros.

Greece can sell the race course, the lottery, and even the railway, “but not P.P.C.,” said Alexandros Athanasiadis, a Pasok deputy whose constituency is in Kozani in northern Greece, where P.P.C. has one of its biggest coal-fired plants. “It’s a profit-making company and it provides jobs for thousands,” he added.

With a six-seat majority in Greece’s 300-seat Parliament, the government is unlikely to lose the vote next week, but rebel Socialist lawmakers may push for the bill to be watered down, as has happened with other controversial measures, especially if union pressure mounts.

Indeed, many union leaders are also members of Pasok. In 2001, a previous Socialist government had to withdraw a bill proposing a pension system overhaul following weeks of mass, union-organized street protests.

Those same unions have also managed to keep foreign buyers at bay. In the past 20 years, Greece has attracted only one big strategic investor — Deutsche Telekom, which has a 30 percent stake in the telecommunications company O.T.E.

Deutsche Telekom is legally bound to buy as much as 10 percent more of O.T.E. should the Greek government sell shares by the end of this year, and has the first right of refusal beyond that.

The Greek Finance Ministry said that a French company, Pari Mutuel Urbain, was in talks about the race track, but could give no details of other potential deals. P.M.U. for its part had no immediate comment.

Article source: http://www.nytimes.com/2011/05/10/business/global/10privatize.html?partner=rss&emc=rss

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