Greece Squeezed in Mid-Audit after Russian Gas Pullout
A last-minute Russian pullout from a major gas privatization has blown a huge hole in Greece's yearly revenue goals during an audit by EU-IMF creditors, raising questions over deficit management in the next six months.
Russian giant Gazprom declined on Monday to table an offer for Greek state gas distributor DEPA, citing concerns about the company's financial viability.
As Gazprom was the sole expected bidder, the tender automatically collapsed and will be redrawn.
It had been hoped that the DEPA sale would raise at least 700 million euros ($912 million), about a quarter of the money Greece needs in privatization proceeds this year under its EU-IMF bailout goals.
The setback came during a scheduled audit of Greek reforms by a creditor mission from the European Union, International Monetary Fund, and the European Central Bank, the so-called troika.
Greek media reported on Tuesday that the DEPA hole would likely bring more fiscal measures which the country's embattled coalition government had hoped to avoid until at least next year.
"The deficit will be made up with spending cuts and new taxes," said leftist Eleftherotypia daily.
"There is now a possibility that the government will be asked to adopt new measures...or bring forward other privatizations slated for 2014," said conservative daily Eleftheros Typos.
The Athens stock exchange opened with a 1.91-percent fall on Tuesday. It had registered a 4.69-percent drop on Monday.
Gazprom said on Monday that it was worried by steep unpaid bills owed to DEPA by independent electricity producers and industry.
But there are also strong signs that the European Union had reservations about the sale as Gazprom is a key gas supplier to Greece.
"We did not receive adequate guarantees that DEPA's financial situation will not deteriorate until the deal is concluded," said Gazprom spokesman Sergei Kupriyanov.
"The takeover procedure could last another year after the end of the tender," he added. "The company is already burdened with unpaid customer bills."
Fellow Russian firm Sintez likewise held back bidding on DEPA subsidiary DESFA, the Greek gas transmission system operator.
The Russian pullout poured cold water on a positive period for Greece when it was building up praise from international officials for its progress on enacting austerity and structural reforms.
IMF director Christine Lagarde said last week that Greece had achieved "massive, unprecedented fiscal consolidation" and the global lender even went as far as admitting planning errors in Greece's first bailout deal.
And Jeroen Dijsselbloem, head of the Eurogroup of eurozone finance ministers, has offered hope that further debt relief for Greece could be discussed next year if Athens stays on track with its recovery program.
The latest creditor audit will determine the release of an installment of 3.3 billion euros ($4.3 billion) of loans approved in May.
The troika is looking to see what progress Greece has made in overhauling its state administration and liberalizing its energy sector, while Athens is requesting a cut in sales tax to capitalize on the tourism season.
In return for two EU-IMF bailouts, Greece has pledged to raise 9.5 billion euros ($12.4 billion) in asset sales by 2016, a target that was originally 50 billion euros.
The privatization drive has had a slow start and revenue goals have been repeatedly scaled back since it began in 2010.
The state privatization agency has also changed three managers in less than a year.
Greece must raise 2.6 billion euros ($3.4 billion) in asset sales this year.
Source: Agence France Presse
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