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Greece Won’t Need New Budget Cuts After Depa Blow, Samaras Says

June 11, 2013

Greece Won’t Need New Budget Cuts After Depa Blow, Samaras Says

Luxembourg Prime Minister Jean-Claude Juncker and Greek Prime Minister Antonis Samaras, left, leave the prime minister's office after their meeting in Athens on June 11, 2013. Photographer: Louisa Gouliamaki/AFP via Getty Images

Greek Prime Minister Antonis Samaras denied more austerity measures will be needed because of the government’s failure to attract any bids for its gas monopoly.

A new tender for the sale of Depa will be issued and the country’s asset-sales program will continue as planned, Samaras told reporters in Athens today. Any suggestions the government will introduce budget cuts to compensate for shortfalls in its revenue target from asset sales are “ridiculous,” he said.

“This is a competition that will restart very soon and will succeed,” Samaras said after meeting with Luxembourg Prime Minister Jean-Claude Juncker. “I believe it will succeed because the climate has changed for the country.”

Greece’s unsuccessful attempt to sell Depa marked the latest setback to a state-asset sales program that underpins 240 billion euros ($318 billion) of bailout loans from the euro area and International Monetary Fund. Russia’s OAO Gazprom (GAZP) was the most prominent contender to buy the company, and Greece had pinned hopes on a Russian bid to revive interest in the sales.

The yield on Greece’s 10-year bond climbed 95 basis points to 10.51 percent at 4:40 p.m. in Athens today. Greece’s benchmark ASE Index fell 4.6 percent, extending yesterday’s 4.7 percent slump.

‘Disappointing’ Progress

The sale of Depa and Opap SA (OPAP), the country’s gambling company, were central to Greek government plans to raise 2.3 billion euros this year, a target that already has been revised down. The IMF has described Greece’s progress on selling state holdings as “extremely disappointing.”

Bidders were invited to express interest in either buying all of Depa and a 66 percent stake in gas-grid operator Desfa or just acquiring Depa. The Hellenic Republic Asset Development Fund said yesterday it had received only one offer for Desfa, from Azerbaijan’s Socar, and no bids for Depa.

Gazprom decided against bidding for Depa because it didn’t get adequate guarantees on the gas company’s continuing financial health, according to Sergei Kupriyanov, a spokesman for the Moscow-based company. The guarantees related to state regulation and Gazprom saw the risk of Depa’s finances worsening by the time the deal closed, while Depa also had problems collecting from customers, he said.

Mytilineos Holdings SA (MYTIL) and Motor Oil Hellas (MOH) SA, which had earlier made a non-binding offer for Depa through a joint venture, between them owed Depa 225 million euros, according to a written submission to parliament this month. Mytilineos, a Greek industrial group and energy producer, owed 188 million euros, while Motor Oil Hellas, the country’s second biggest refiner, owed 37 million euros, according to the statement.

Locked out of bond markets since April 2010, Greece is the only nation to receive two bailout packages from the euro area and IMF as public opposition to pension and wage cuts derailed the pace of promised economic reforms.

To contact the reporters on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net; Antonis Galanopoulos in Athens at agalanopoulo@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net; Maria Petrakis at mpetrakis@bloomberg.net


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