Kerin Hope of Financial Times noted that Greece is struggling to avoid the collapse of a second big privatization deal, amid threats and pressure from bidders for the state lottery monopoly to change key terms of the deal they agreed last month.


Emma Delta To Cancel Two Key Elements Of The Deal

Emma Delta – a bid vehicle backed by Greek oil tycoon Dimitris Melissanidis and Czech billionaire Jiri Smejc – made the only offer for the Greek state’s 33 percent holding in Opap.

Problems with the €700m sale of Opap threaten to add to tension with Greece’s international creditors, who fear the slow pace of privatization will require further spending cuts to keep the country’s bailout on track.

According to documents seen by the Financial Times, Emma Delta now wants to cancel two key elements of the deal: a three-year, €110m contract with Intralot, Opap’s Athens-based technology supplier; and a 12-year concession to operate the Greek state lottery in return for a €190m down payment and €50m annually.

The lottery was last year awarded to a consortium including Opap, Intralot and Scientific Games of the U.S., the world’s largest lottery software provider. Neither contract has been signed.

Greece’s Privatization Program

Greece’s privatization agency, Taiped, has rejected formal complaints by Emma Delta threatening to pull out of the deal and take legal action if its demands are not met.

Taiped failed to deliver one milestone privatization this month when Gazprom unexpectedly pulled out of the bidding for the state natural gas supplier Depa. If the Opap sale falls through, Greece’s privatization program will be in disarray, raising the possibility that the “troika” of international lenders could appoint international managers to replace Greek executives hired by the Athens government to sell €15bn of state assets by 2016.

Greece’s Bailout by the IMF

A review of Greece’s bailout by the IMF this month found that income lost through slippage of the privatization program  would contribute to a hole in Athens’ budget and “additional financing will need to be identified”.

The disposals of Depa and Opap were expected to cover about half this year’s €2.6bn target for privatization revenues agreed with the EU and International Monetary Fund, but failure to sell Opap would be likely to see income from disposals this year fall below €1bn. The target has already been revised downwards twice because of the risks associated with investing in recession-mired, politically unstable Greece.

Taiped has pulled off only one sizeable deal this year: the €400m sale of Desfa, the natural gas grid operator to Socar, the state gas operator of Azerbaijan.

Critics of Greek Privatization

Critics of Greek privatization say the Opap dispute illustrates how Taiped’s mandate to “sell to the highest bidder” without giving priority to qualitative criteria or operational experience has undermined the program. “The programme has suffered overall because of a lack of interest from globally recognized players,” said one consultant who declined to be named.

Mr. Stavridis, Taiped’s third chairman in less than a year, says he is still “cautiously optimistic” about persuading Emma Delta to drop its demands. “We negotiated the Opap deal in a transparent way and in line with international practice. Now we have to make it stick,” he says.