Greek gas sale deflates amid new EU-IMF inspection

Greek gas company sale stalled, EU-IMF rescue lenders renew inspection

Associated Press
Greek gas sale deflates amid new EU-IMF inspection
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International Monetary Fund (IMF) mission chief Poul Thomsen, second right, arrives for a meeting between Greek Finance Minister Yannis Stournaras and debt inspectors from the European Central Bank, European Commission and IMF, known as the troika, in Athens, on Monday, June 10, 2013. Greece is seeking additional debt relief from rescue lenders who have set balancing the 2013 budget as a condition. (AP Photo/Petros Giannakouris)

ATHENS, Greece (AP) -- Greece's troubled privatization program suffered a blow Monday after the Russian energy giant Gazprom withdrew its interest in buying the natural gas firm DEPA, citing fears over the Greek company's future finances.

The news, announced as a delegation from Greece's international creditors returned to Athens for a new round of inspections, hammered stocks in Greece, with the main index closing 4.7 percent lower.

After the deadline expired Monday, DEPA failed to attract any bids while sister company DESFA, the gas network operator, received a single bid from Azerbaijan's state oil company SOCAR, Deputy Development Minister Asimakis Papageorgiou said.

"As far as DEPA is concerned, it will be re-examined and retendered at a future time — when conditions will be much more favorable for greater participation," he said.

The head of Greece's privatization fund, Stelios Stavridis, said the new tender would be held "as soon as possible," but gave no further details. Stavridis said Gazprom's decision was a disappointment "but not a disaster."

Gazprom spokesman Sergey Kupriyanov said in a statement that DEPA is burdened by unpaid bills from customers and awaits restructuring related to the spinoff of DESFA. He added that potential investors were not guaranteed freedom from state interference.

"We have not received sufficient guarantees that the financial state of DEPA would not deteriorate by the time the deal is completed," he said, adding that the process could have taken up to one year.

"All this creates substantial risks affecting the value of the company, while the price of the deal will already be fixed without taking into account all these factors," he added.

Gazprom's withdrawal of interest sparked an angry response from the Greek privatization fund, which said the concerns cited by Gazprom would have had "minimal" effect on DEPA's value.

"By no means do they excuse withdrawal from the tender, particularly following such great interest and an in-depth process that lasted for months," the fund said in a statement.

Papageorgiou denied that the failed sale would force Greece to sell DEPA at a lower price next time.

"There is no change in the least regarding its value or its plans ... in six months it may even have a higher value," he said.

Papageorgiou also argued that interest by SOCAR had improved Greek prospects in winning a future bid to transport Azeri natural gas from the Caspian Sea to western Europe.

The proposed Trans-Adriatic pipeline venture — which would cross Greece, Albania and the sea to Italy — is in competition with the Nabucco-West pipeline that would take a longer all-land route north to Austria.

Meanwhile, officials from the International Monetary Fund, the European Union and the European Central Bank met with Finance Minister Yannis Stournaras and other Greek government officials in Athens.

Greece is seeking permission to make tax cuts for the first time as part of its austerity program. Arguing that it is meeting its deficit targets, the country is looking to lower levies on catering services.

The country's January-May primary budget deficit stood at 984 million euros ($1.3 billion), better than the target figure, according to preliminary data reported Monday by the finance ministry.

Troika officials will be focusing on a delayed program to dismiss Greek civil servants as well as the stuttering privatization process, key parts of Greece's bailout commitments.

The IMF last week sparked an international debate on Greece's bailout with a report in which it said that mistakes had been made in the early stages of the Greek rescue program in 2010. The organization highlighted the inconsistency in Europe's policymaking and said the restructuring of Greece's public debt — which came two years after the bailout — should have come much earlier.

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AP writer Derek Gatopoulos contributed.

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