Greece said yesterday (30 November) that talks to sell a 66% stake in gas grid operator DESFA to Azerbaijan’s state-owned oil company, SOCAR, were not successful.
The Greek energy ministry said SOCAR’s proposal to reduce the price of the €400 million deal was not feasible from a legal standpoint and would cancel the tender.
“These discussions have ended,” the ministry said in a statement, referring to talks with SOCAR and Snam, the Italian group which has formed an alliance with the Azeri giant.
The ministry said the SOCAR and Snam consortium, which was interested in acquiring a 17% stake in DESFA, wanted to pay in installments, a proposal rejected as legally unworkable, leading to negotiations on “alternative options”, which in the end came to nothing.
Vitaly Baylarbayov, deputy vice-president of SOCAR, recently told EurActiv.com that while the negotiations dragged on since Azerbaijan won the tender in December 2013, the price of DESFA reduced, and that’s why the sides needed to find a compromise.
The deal was further marred by more uncertainty when Greece passed a law that raised DESFA’s gas tariffs by a much lower amount than expected. According to Azernews, the Azerbaijani side reportedly assessed the purchase of the 66% stake at €260 million.
The negotiations also took a long time because the European Commission launched an investigation into whether the acquisition of DESFA by SOCAR breaks EU competition rules. SOCAR is one of the companies in the consortium of the TAP pipeline, which plans to transport Azeri gas across Greece to Italy and Bulgaria.
The Commission asked SOCAR to sell 17% of DESFA to a third party so that its stake drops to 49% and satisfies EU competition authorities. That is how Snam came on board.
According to Greek news agency Ana, the ministry may soon launch a tender for the sale, foreseen as part of a programme of privatisations demanded by Greece’s EU and International Monetary Fund (IMF) creditors.
In the previous tender, three Russian companies were bidding to acquire Greek gas companies DEPA and DESFA.
According to EurActiv sources, SOCAR made the decision to acquire DESFA upon the Commission’s advice.
The centre-right New Democracy party, currently the main opposition force in Greece, blamed the leftist Syriza-led government for the failure of DESFA’s privatisation, calling it “incompetent”.
“At a time when unemployment makes hundreds of thousands of Greeks desperate, at a time when public funds need revenues, while the government imposes new taxes and the second evaluation is on the edge, the greater use of public assets amounting to €400 million and an investment program worth €2.5 billion, concerning the 2014 DESFA agreement, is killed by the Syriza-led government,” New Democracy said in a statement.
“Does anybody really believe that this inappropriate government can attract investors to the country?” the right-wing party asked. “They must leave now.”
A Greek energy ministry official told Reuters that the DESFA privatisation remains a commitment under the country’s international bailout plan, and that the government would decide on its next steps next week.