Russian railroads privatizing Greek OSE would help Greece get out of crisis - expert
Russian Railways is not the only company that is applying for Greek OSE. How do you estimate chances of Russian company?
I believe that Russian railroad doesn’t possess necessary financial resources for the purchase of Greek company but on the other hand the Russian company maybe somewhat limited in the use of any such funds for the purchase of assets in other countries. So, Greek assets are not exactly necessary for Russian railroads to carry out its main operations here at home. So, if it so happens that Russian railroads pays extra and above the fair value of the Greek assets it may raise certain questions of the appropriateness of such a purchase especially seeing that there are concerns on the company’s ability to finance its existing extensive investment program here in Russia. But there are certain political issues involved as well which could push the Russian company to offer a little bit extra just to win the bid for the Greek railroads.
It is expected that the deal will help Greece overcome the crisis. What about Russia? What is it for Russia in this deal?
It is an opportunity for Russia to gain control over the railroad infrastructure in the country which is part of the European Union, which in itself offers certain advantages to Russia and Russian railroads. There are long-term plans to establish Russia as a foremost transit route for cargo transfer which is Europe and Asia and assets in Europe could be very helpful in that respect.
What are the risks?
I think one of the risks is obviously Russian railroads paying too much and above the fair value of the assets, and the other risk is of course economic risk, which lies in the inability of Greek economy to recover as quickly as planned and perhaps a longer-term economic instability in Europe.
Will it help Greece to heal its wounded economy by letting international companies get their hands on national ventures?
Definitely at the time Greece is in need of foreign investment seeing that the government is cutting its spendings. So, attracting foreign investors which have enough money to spend as well as invest in the infrastructure in the country is going to contribute to the economic recovery of Greece.
Several months ago Russia refused to buy DEPA? What do you think changed now? Why did Gazprom decide to participate in a tender for the sale of Greece’s gas company once again?
I think it is important to know that the auctions didn’t take place because the assets was valid to high by the government and many bidders simply withdrew from the auction because of that. But all in all, DEPA is quite attractive gas distribution business in a European country and Gazprom could use it to strengthen its position in the most lucrative European market, as gradual recovery will eventually take place and gas consumption in Greece as well as the neighboring countries picks up. As far as DEPA itself goes, the company has contracts of gas supply to nearly 200 companies in Greece and is delivering a solid result although it is worth to mention that company’s net profit continues decreasing and has shrunk by nearly 30% in 2012, although gas sales volumes have increased by about 10%. But speaking of the overall picture major supplies to the DEPA are Russia, Turkey and Algeria, so I think Gazprom will be hoping to replace some of the other gas supplies by other countries which account for about a quarter of the size of billion cubic meters per annum consumption with its own and increase the sales in the country.