50 billion euros. The privatization plan announced by Papandreou is worth it, the main dish of the recovery program requested by the European Union and the International Monetary Fund to release the 110 billion euro of credit that would save Greece from default. Many have wondered whether a program of this size to be implemented by 2015 is feasible. Data from the Privatization Barometer they help clarify.
From 1991 to today, Greece has made 25 billion euros in revenues. Major deals involved phone operator OTE, banking and energy with Public Power Corporation (PPC) sales in electricity and DEPA in gas. In his time it was the right wing of the Democratic Alliance that reprivatized many companies that PASOK had nationalised. Ironically, today the game is played with roles reversed, and it is Papandreu's left that reopens the dossier.
The Greek government's portfolio now consists of 15 stakes in publicly traded companies worth €6.6 billion at market values. The most valuable investment, equal to 1.8 billion euros, is that in DEPA. This is followed by significant stakes in OPAP, the company that manages football bets (1.2 billion) and stakes of just over one billion in the Public Power Corporation and the Agricultural Bank of Greece. The remaining stakes in OTE and Hellenic Petroleum are worth about 700 million each. Added to these are stakes in 70 unlisted companies with total assets of just over 10 billion euros. It is not easy to determine a fair value for these companies, but an optimistic estimate leads us to conclude that the shareholders' equity of these assets does not exceed 7 billion euros.
Of course, these estimates must be taken with caution. The premium for the possible transfer of control, which is moreover problematic on a political level, is not calculated, nor are the labor costs deriving from the restructuring of the companies most weighed down by redundancies (OTE and PPC in particular). Finally, for unlisted companies we have not considered the level of debt.
With these caveats, Grecia SpA is now worth 13.6 billion euros. At least 36 billion euros could therefore be missing to maintain commitments to creditors. In order to raise cash, the government will therefore be forced to dispose of a significant portion of its public assets by selling land, buildings, concessions, infrastructures and many other assets of uncertain value today.
Papandreu will therefore move in the field of the most difficult privatizations, fighting against time, in a context of adverse market, high unemployment and social tension.
Better to leave it alone? Definitely no. Beyond the usefulness of the proceeds to reduce debt, launching a privatization program even in critical conditions is essential to reassure the markets by signaling the government's determination to address the problem of the abnormal expansion of the public sector which is the real root of the Greek crisis. Of course, privatizations are not a panacea. The other measures envisaged in the austerity plan will also be needed, and - we hope - a more cooperative and innovative approach by Europe in managing the crisis. The "Washington consensus" is no longer in fashion.
