By Lefteris Yallouros – Athens
The Piraeus Port Authority (OLP) and COSCO Holdings Group Co Ltd have completed an agreement to expand the Chinese company’s container operations at the Port of Piraeus in a deal worth EUR 230 million.
The agreement involves the investment of EUR 230 million by COSCO in order to increase the handling capacity of the port of Piraeus to an annual 6.2 million TEUs over the next seven years.
Under the Concession Agreement, PPA agreed to grant a concession to PCT for (a) the development, operation and utilization of the existing Pier II; and (b) the construction, operation and utilization of the Eastern Part of Pier III. The Concession is for an initial term of 30 years, with a mandatory extension for a term of 5 years subject to PCT’s fulfillment of its obligations to construct the Eastern Part of Pier III.
Piraeus, one of Europe’s busiest tourism ports handling about 20 million passengers a year, aspires to become a gateway for Chinese trade into the region.
“This agreement is as valuable as the initial one which brought the Chinese company to Greece,” said Minister of Mercantile Marine Miltiades Varvitsiotis. “This is the biggest investment in Greece since the crisis. It proves the country’s image is changing and that with consistent work growth could return. Our aim is to make Piraeus the metropolitan port of the Mediterranean for the next 25 years” the minister added.
The deal also includes the creation of an oil pier as well as new mechanical equipment in piers II and III.
Through these projects – and especially the installation of Super Post Panamax cranes – Piraeus is upgraded into a hub welcoming new generation vessels while the capacity of piers II and III are also boosted.
The variable annual concession fee payable by PCT will no longer be subject to the guaranteed minimum payment until the date the Western Part of Pier 3 enters into operation and in any event until the GDP returns to an adjusted level taking the GDP in 2008 (i.e. €210,443 million) as the base plus a compounded increase of 2% per annum
The signing of the Amendment Agreement will support Piraeus Container Terminal (PCT) to rationalize the payment of the concession fee when the market is unfavorable and the revenue is lower than the original forecast.
It is also estimated that the investment will generate 700 new jobs in Piraeus along with another 1.500 indirectly while it ensures the growth prospects of the port of Piraeus.
The Piraeus container port handled a total of 625,914 TEUs of cargo last year, up 28 percent on 2011.
Meanwhile, a group from New Zealand has emerged as a suitor for the OLP stake that is set to go up for sale by the Hellenic Republic Assets Development Fund.
It appears that Morrison & Co, in cooperation with ICM Limited (which manages the Utilico Emerging Markets Ltd investment fund and holds stakes in a series of port activities), will enter the bidding for the OLP stake after the two groups sent a letter to Merchant Marine Minister Miltiadis Varvitsiotis expressing their strong interest in the port authority’s privatization.