Major stake in Greek gas company DESFA sold to State Oil Company of Azerbaijan

Major stake in Greek gas company DESFA sold to State Oil Company of Azerbaijan

 

By Lefteris Yallouros – Athens

The State Oil Company of Azerbaijan (SOCAR) signed an agreement over the weekend to purchase 66% stock in the Greek gas distribution state company DESFA with the Greek State Property Management Foundation and Petroleum Company.

The sale is part of Greece’s state asset sale program originating from its EU-IMF bailout obligations.

The signing ceremony took place in the presence of Energy Minister Yiannis Maniatis and deputy Minister Asimakis Papageorgiou. Abdullayev had a meeting with Greek Prime Minister Antonis Samaras at the PM’s office, on the sidelines of the signing.

The documents signed Saturday will come into force after their approval by European Commission Directorate General for Energy and Antitrust Policy which is expected in the second quarter of 2014.

DESFA is a division of the Greek state gas company DEPA, whose privatization failed in June due to the lack of formal bids including that from Russian giant Gazprom, which had been considered the most likely buyer of DEPA.

The deal is important to Greece as the government hopes it will boost the country’s ailing finances and attract foreign investment to Greece.

The governing board of the Greek state privatization fund TAIPED approved the Azerbaijani company’s revised offer for a 66 percent stake of DESFA in early August.

SOCAR offered 400 million euros for the purchase of 66 percent of shares, including 31 percent of the shares owned by the Greek state privatization fund and 35 percent of Hellenic Petroleum’s stock.

HRADF will have the control over the sold part of the shares till the end of the transfer, that is, the seller will retain control over DESFA till the end of 2014.

SOCAR has also expressed its intent for DESFA to expand to the countries of Eastern Europe, via the supply of know-how on management of natural gas systems and the development of services.

More to come?

SOCAR’s president, Rovnag Abdullayev, referred to a special chemistry between the leaders of the two countries that allows ground for the bilateral relations to extend. “It is not only TAP or DESFA but also the future plans”, he noted and expressed his gratitude for Greece’s support. “As SOCAR’s chief I promise to do the best possible to further boost our cooperation”, concluded Abdullayev.

Privatization program

The deal is important to Greece as the government hopes it will boost the country’s ailing finances and attract foreign investment to Greece.

Privatization is a cornerstone of Greece’s recovery program; however, plans have been delayed by the scale of the undertaking, and shaky investor interest.

The first major sell-off only succeeded this year, with the sale of state betting agency OPAP. However, high – profile privatization efforts have failed embarrassingly such as the sale of DEPA for which Greece failed to attract a single bid.