COSCO to expand operations in Greece
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E-mail Shanghai Daily via agencies, September 3, 2013
China's largest bulk shipper COSCO Holdings Co has agreed a multi-million-euro expansion of its container operations at Greece's biggest port Piraeus (OLP), easing the way for the port's privatization.
Under a deal announced by Greek officials yesterday, COSCO will not pay fees to OLP in return for making the investment, removing a question mark over growth at the port and moving Greece a step closer to selling its 74 percent stake.
In turn this could add impetus to Greece's ailing sell-off program, which has been hampered by the wariness of international investors to buy assets in the recession-hit country but which remains vital if Greece is to keep receiving bailout funds and debt relief from its international lenders.
"This agreement is as valuable as the initial one which brought the Chinese company to Greece," shipping minister Miltiades Varvitsiotis told newspaper Naftemporiki.
COSCO took over management of OLP's container port in 2008.
Under the terms of the agreement, COSCO will spend 230 million euros (US$303 million) to increase Piraeus's cargo handling capacity by two-thirds over the next seven years to an annual 6.2 million TEUs (twenty-foot equivalent units).
In exchange, the deal suspends the fixed guaranteed fees COSCO was contractually obliged to pay to OLP, until Greece's gross domestic product returns to its pre-crisis level of 2008, "plus 2 percent each year."
According to Greek GDP forecasts, this concession effectively suspends COSCO's payments until after 2020, saving the Chinese company at least 250 million euros.
The deal will be submitted to the two companies' boards for final approval.
Piraeus, one of Europe's busiest tourism ports handling 20 million passengers a year mainly to and from the Greek islands, aspires to boost its cargo trade and become a gateway for Chinese trade into the region.
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