The transfer of 16% of the PPA shares to Cosco in the final stretch

The case of the transfer of 16% of the Piraeus Port Authority from the Greek state to the Chinese firm Cosco seems to be entering the final stretch.

Information states that the relevant procedures will start next week and especially from June 14. However, it still seems that there are serious questions about how 16% of the shares will be transferred if the mandatory investments of a total amount of 293.8 million euros have not been completed.

The largest of the mandatory investments is the new cruise pier, an investment of 136.3 million euros, which is still in its infancy and is facing serious delays due to the appeal of Piraeus residents to justice.

PPA claims that it has contracted over 80% of the projects and the Greek state is responsible for any delays. It should be noted that just a few days ago the PPA published an announcement for an expression of interest for the construction of an underground road connection of a car distribution station with a site formerly belonging to the state .

The PM’s office, according to the relevant information, wants to close the issue and avoid resorting to arbitration. In fact, more specific information from the Ministry of Shipping states that the solution is sought for some form of guarantees from the Chinese that the investments will be completed even if delayed.

On the other hand, there is the view that the non-completion of investments cannot be legally circumvented and the government will have to face problems and possibly appeal to a European court.

However, it should be noted that the Greek Prime Minister Kyriakos Mitsotakis stated his position in an interview with journalist Ben Hall in the context of the conference The Global Boardroom of the “Financial Times”, in early May.

To the question whether the state will privatize the rest of the port and hand it over to Cosco, Mr. Mitsotakis answered: As you know, there is a shareholders’ agreement which we will obviously abide by. Both sides have obligations. They also need to make some investments. We have some issues to settle with them to ensure that this investment is mutually beneficial. But in the big picture, indeed China has invested in the port of Piraeus at a time when no one was interested in doing so and it is a successful investment, but Greece is not particularly dependent on Chinese investment looking at the map of Foreign Direct Investment and especially looking at the countries that have expressed interest in investing in Greece, for example I see other ports that are being privatized and interest has been expressed by many countries and many reservoirs of capital. I do not expect much dependence on China in terms of infrastructure investments in Greece.

It is recalled that the tender for the privatization of PPA concerned 67% of its share capital, with an initial transfer of 51% of the shares and retention of 16% by the State for a period of five years (until August of this year) to implement the binding investments. Cosco for the 51% acquired in August 2016  paid 293.7 million euros at that time while for the acquisition of this additional percentage, ie 16%, has deposited 88 million euros, in a escrow account, since 2016