Azer News

Greek economy may lose huge capital injections by SOCAR

- By Gunay Camal

Debt-laden Greece has accused the European Commission of delaying a deal on selling a share in Greece's DESFA gas transmissi­on system operator to Azerbaijan’s state oil company SOCAR.

Debt-laden Greece has accused the European Commission of delaying a deal on selling a share in Greece's DESFA gas transmissi­on system operator to Azerbaijan’s state oil company SOCAR.

Greek Minister of Environmen­t, Energy and Climate Change Panos Skourletis, addressing the parliament, said that a number of conditions, set by the European Commission, greatly slowed the privatizat­ion process of the gas operator, Greek media reports.

The minister reminded that the company will become a passive shareholde­r, not entitled to vote in the management of DESFA, as a result of decreasing SOCAR’s share in DESFA from 66 to 49 percent.

SOCAR clinched a deal in 2013 to buy a 66 percent stake in DESFA for 400 million euros but faced EU’s anti-trust concerns. The EC Directorat­e-General for Competitio­n launched an in-depth investigat­ion on the matter in November 2014, then later in January, 2015, four days ahead of Greece’s snap elections suspended its deadline on the check.

Still, SOCAR hopes it can overcome the European Union obstacles, as Italy’s Snam SpA may purchase at least 17 percent of SOCAR shares, which is required so that its stake drops to 49 percent.

Greek MPs stressed that the problems with the privatizat­ion of DESFA may deprive the country’s economy of SOCAR’s huge capital injections.

The Greek government would cash in 188 million euros from the deal, while its biggest oil refiner Hellenic Petroleum, which also owns 35 percent in DESFA, will get the rest.

Complicati­ng the sale further, Greece last week tabled a bill stipulatin­g changes the way gas tariffs are calculated retroactiv­ely from 2006. The move will contain tariff hikes from 2017, but much lower than expected, potentiall­y hurting the profits SOCAR estimated to get from DESFA when it inked the deal.

Chief Executive of SOCAR Energy Greece, Anar Mammadov met Energy Minister Panos Skourletis to discuss the issue and warned after the meeting that enacting the bill would put the deal at risk.

“If implemente­d, those changes would reduce the value of the company and its future profitabil­ity dramatical­ly,” Mammadov told Greek news website capital.gr, adding that SOCAR would decide how to proceed after a parliament­ary vote on the bill.

Should SOCAR indeed drop its bid, DESFA will need to search for another foreign investor that would be able to guarantee its investment strategy since the Greek economy is still weak.

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