COSCO Pacific is the sole bidder for a 51% stake in Piraeus Port Authority (PPA), after rival terminal operators APM Terminals (APMT) and International Container Terminal Services, Inc. (ICTSI) failed to submit offers by the bidding deadline.
Greece’s state privatisation agency will open the sealed bid on January 12, 2016, although the privatisation process is expected to last several more months, with parliamentary approval still required.
The successful firm will operate a container terminal which handled 600,000 teu last year as well as a cruise terminal and car terminals.
Chinese state-owned company COSCO Pacific was already a considerable favourite to win, owing to the fact that it already operates six deepwater berths at Piers 2 and 3 of the port, which make up its wholly-owned subsidiary Piraeus Container Terminal (PCT).
In the first 11 months of 2015, PCT handled 2.7m teu, up by 1.6% over the equivalent period last year, representing the majority of the port’s container volumes.
An industry source in Piraeus told CM that APMT were put off from bidding due to knowing that a rival operator would be in charge of the “cash cow”, PCT.
Currently, up to 50% of the port authority’s revenue comes from the existing concession to COSCO Pacific. Hence, “50% of your revenue generation stream will not be controlled by you but by your main competitor”, making for a “hazy business plan”, the source added.
Meanwhile, ICTSI is thought to be out of the picture as it did not want to take part in a bidding war.
The 51% stake can rise to 67% over the next five years if the winning bidder commits to an investment program worth €300m (US$329m).
According to the industry source, Greek authorities want COSCO Pacific’s bid to at least meet 51% of the company’s market value on the Athens stock exchange; roughly in the region of US$200m of an overall US$390m valuation.
In a separate programme, PCT has previously agreed to invest €230m (US$251m) in equipment and infrastructure on the West side of Pier 3, bringing the net value of the current agreement between COSCO and the PPA to €1.1bn (US$1.2bn).
When complete in 2019, the new development will increase PCT’s total number of berths to eight, extend its total quay length to 3,407 m and boost water depths to a range of between 14.5 m and 18.5 m; thus raising the total capacity of Piers 2 and 3 from 3.7m teu to 6.2m teu.
It is thought that APMT and other leading terminals operators could still be interested in a potential bidding process for Thessaloniki Port where 285,000 teu of containers were handled between January and October this year.
However, there is also significant local angst against the privatisation, which could slow down any such process, once the Piraeus deal is finalised.