Greece Eyes UK-style Railway Privatization

Greece Eyes UK-style Railway Privatization

April 26, 2012

Reuters - Greece is considering breaking up its railway and selling the right to operate some routes to different companies, in an attempt to maximize proceeds from the privatization and sidestep regulatory hurdles.

The heavily indebted country had initially planned to sell Trainose - the monopoly that operates 500 freight and passenger routes on 2,500 km of railways - as part of its international bailout.

But the chief executive of Greece's privatization agency (HRADF) told Reuters that to maximize the value of the sale Greece was now examining a different privatization model, similar to the one used in the United Kingdom.

"HRADF is considering the launch of a tender process through which the sale of train slots on different parts of the network will be offered to interested operators," Costas Mitropoulos said.

"Interested investors, as in Britain, will pay a cash consideration for the operation of the slots, using their own resources, as well as personnel," he added.

Mitropoulos said the agency will soon appoint an adviser for the sale.

The railway network, including track and other infrastructure, is owned by Railway Organization of Greece (OSE).

Another official at the agency told Reuters on condition of anonymity that by selling operating franchises and not Trainose itself, Greece would avoid having to secure European Competition Commission approval for state aid to Trainose.

Sources told Reuters earlier this month that Russian railways, France's SNCF and Romania's largest private railway company, Grup Feroviar Roman, were interested in buying all or part of Trainose. Greek officials hoped the sale would raise 200 million euros ($265 million).

Mitropoulos said that no formal interest has been expressed yet.

HRADF had planned to launch a tender for the sale of Trainose in the last quarter of the year.

Greece received a 130 billion euro bailout from the European Union and the International Monetary Fund earlier this year.

The proceeds from the railway sale are meant to help Greece meet its target of 19 billion euros from sales of state assets by 2015, part of broader plans to lower debt from about 165 percent of GDP last year to a more manageable 116.5 percent by 2020.