Greece will decide next week how to proceed with the sale of its natural gas grid operator, a key term of its international bailout, after talks with Azerbaijan’s SOCAR collapsed, a source close to the matter said on Thursday.
SOCAR agreed to buy a 66 percent stake in DESFA from Greece and its biggest oil refiner Hellenic Petroleum in 2013. But the 400 million euro deal hit a snag when the European Union, on competition grounds, asked it to reduce the stake.
The sale ran into further complications last summer when Athens passed legislation raising DESFA’s gas tariffs by a lower amount than SOCAR had expected, eating into its future profit.
Since then, Greece and SOCAR have been struggling to salvage the deal. The energy ministry said on Wednesday that talks were inconclusive.
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It said SOCAR’s request for a lower price was not legally feasible and would lead to the cancellation of the tender, while other proposals did not comply with European Union rules.
“The decisions will be made next week,” the source told Reuters on condition of anonymity adding that there would be consultations with the country’s official creditors, which will help determine whether Athens will relaunch the sale or change the terms of the current tender.
The issue is expected to be discussed at a meeting of euro zone finance ministers on Monday in Brussels, which will take stock of Greece’s bailout progress. Speeding up privatisations, which have reaped only 3.4 billion euros since 2010 due to red tape, union and political resistance has been a key demand.
SOCAR confirmed on Thursday that the talks had failed.
“The parties could not agree on a mutually acceptable commercial mechanism to address the investors’ and the sellers’ concerns,” it said in a statement.
Italian gas grid operator Snam was interested in buying a 17 percent DESFA stake which SOCAR planned to sell, in order to comply with the EU competition rules.
Snam declined to comment on the failed talks on Thursday.
Greece is set to miss its 2.5 billion euro bailout target for proceeds from state asset divestments this year. It is expected to raise only 500 million euros, according to a budget draft which is being debated in parliament.
It expects revenue of 2.6 billion euros from the scheme next year, including 188 million euros from the DESFA sale. Brent Suter JerseyShare This