Italy’s state railway buys struggling Greek operator

18/1/2017

By Kerin Hope

Bailout lenders press Athens to speed up privatisation programme

Greece has wrapped up the sale of its struggling rail operator TrainOSE to Italy’s state railway company as the leftwing government comes under pressure from bailout lenders to accelerate the country’s flagging privatisation programme.

The sale of 100 per cent of TrainOSE to Ferrovie dello Stato Italiane will bring in only €45m. But privatisation officials say it completes a series of infrastructure sales to international investors that will boost Greece’s role as a transport and tourism hub for the eastern Mediterranean.

TrainOSE runs a lossmaking international freight business and a subsidised passenger service linking mainland Greece with central Europe through Macedonia and Serbia. FS is expected to take over the operation of TrainOSE this year.

“[FS] is making an important commitment to strengthen and develop TrainOSE with its expertise and experience, thus creating a major provider of railway services,” Antonis Leousis, chief executive of the Hellenic Asset Development Fund (Taiped), the Greek privatisation agency, said at Wednesday’s signing ceremony.

The sale has still to be approved by the European Commission and ratified by the Greek parliament. Following the signing of the sale agreement, the commission is expected to drop an investigation into allegations that €700m of government subsidies pumped into TrainOSE amounted to illegal state aid, Taiped officials said.

Taiped was set up as part of Greece’s first international bailout in 2010 with a brief to raise €50bn by 2025 from sales of public sector corporations, infrastructure organisations and state-owned real estate.

Investor interest has been limited because of slow progress with structural reforms and political instability. In the latest revision of the programme, Greece’s creditors reduced the target for privatisation revenues to €15bn by 2025.

Last year Taiped completed a 40-year concession agreement with Germany’s Fraport group to operate 14 regional airports that handle more than two-thirds of tourist arrivals. The German group is set to begin operating the airports this month.

China’s state-owned Cosco shipping group last year acquired a 67 per cent stake in Athens’ port of Piraeus after operating two container terminals there for the past six years.

TrainOSE already ships Chinese-made goods to central Europe from a railhead at Piraeus but the growth of its freight business has been constrained by a lack of investment.

The Greek rolling stock company has still to be privatised. No bids were received when the company was first put up for sale last year.

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