Greece Moves Forward With First Privatization Since Bailout Deal

Greece gave approval for the first privatization under Prime Minister Alexis Tsipras, a key requirement of the country’s bailout deal with creditors.

A government council overseeing state asset sales has signed off on a 40-year concession for German airport operator Fraport AG and a unit of Greece’s Copelouzos Group to operate 14 regional airports for 1.2 billion euros ($1.32 billion), according to the government’s official gazette.

The move is the first in a series of privatizations that Tsipras agreed to undertake in return for a third bailout package worth as much as 86 billion euros. Most imminent is obtaining funding to avoid a default on Aug. 20 when Greece must pay 3.2 billion euros to the European Central Bank.

Under the current proposal, Fraport would invest 1.4 billion euros to upgrade the airports by the end of the concession. The German company would also pay an annual guaranteed leasing fee of 22.9 million euros for the airports that include the holiday islands of Mykonos and Santorini.

“The Greek government’s decision is not tantamount to the conclusion of a contract but rather offers a basis for the resumption of negotiations,” Joerg Machacek, a Fraport spokesman, said by phone. “We are building up from where we left off.”

While opposed to asset sales when elected in January, Tsipras reversed his pre-election promise in order to seal a bailout deal in July. The shift has split the ruling Syriza party with the prospect of new elections as early as September. Tsipras is planning a confidence vote after 44 of his lawmakers voted against him when the bailout deal was approved last week.

Investment Fund

Under the latest agreement, the third since 2010, Greece will establish a 50 billion-euro investment fund to use as a revenue source over 30 years. The fund will include state property, shares of public companies and infrastructure, Greek officials said this month.

Following the deal, Greece set deadlines for binding offers to buy stakes in Piraeus Port Authority SA, rail services operator Trainose SA, train maintenance company Rosco SA and Thessaloniki Port Authority. APM Terminals, a unit of A.P.Moeller-Maersk A/S, and Cosco Pacific Ltd., which already operates a pier at Piraeus, are among the groups that have qualified to bid for a stake in PPA. Bidders for Trainose and Thessaloniki include OAO Russian Railways.

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