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Large energy privatisations lined up for 2020

Greece's energy deals will feature heavily in next year's privatization program, along with the sale of a stake in the Athens International Airport and progress on Hellinikon, drawing strong interest from Greek and foreign investors. Deals on four important energy projects are seen reshaping the country's business map as the large amounts of capital involved are likely to draw big players from abroad.

Greece's energy deals will feature heavily in next year's privatization program, along with the sale of a stake in the Athens International Airport and progress on Hellinikon, drawing strong interest from Greek and foreign investors.

Deals on four important energy projects - gas company DEPA, Kavala's undersea natural gas storage reserve, Hellenic Electricity Distribution Network Operator (HEDNO) and Independent Power Transmission Operator (ADMIE) - are seen reshaping the country's business map as the large amounts of capital involved are likely to draw big players from abroad.

DEPA is up first, according to sources, with the tender for the sale of 65 percent in its infrastructure to be published in December, while the commercial side of the business will be put up for sale in January.

Among the companies expected to bid for DEPA are the shareholders of Greece's natural gas transmission operators DESFA: Italy's Snam, Belgium's Fluxys and Spain's Enagas. Italy's Italgas has also shown an interest in the DEPA deal. The Italian company is getting ready to enter Greece on another front as it is very close to a deal with Eni Gas e luce to buy its stake in EDA THESS, the gas distribution company of Thessaloniki and Thessalia.

On the commercial side of the business, DEPA may no longer have a monopoly but its strong network in the broader Athens area and its experience make it an attractive choice for investors. Its appeal is growing ahead of Greece's switch from lignite powered electricity plants to other forms of energy which will be dominated by natural gas. Mytilineos and Hellenic Petroleum have confirmed their interest in DEPA, while other likely contenders are Motor Oil, the Copelouzos group, Zenith, and Edison.

Another big battle regarding natural gas is the privatization of the empty undersea natural gas reserve off Kavala that can be turned into a 360 million cubic meter storage unit. STORENGY, a joint venture made up of Engie, Energean Oil and Gas and GEK TERNA have expressed their interest in the project, while DESFA is also expected to bid for it. The undersea storage facility will need investments of between 300 million euros to 400 million euros in a privatization that is expected to be launched by Greece in the first half of next year.

On a global level, more than 640 underground natural gas facilities are in operation with a total capacity of 330 billion cubic meters, an amount equal to 11 percent of global consumption. In Europe alone, 126 underground storage units are in use with a capacity of 80 billion cubic meters. Greece is one of the few countries in Europea with no such facility in use.

The big one

In the electricity market, the big battle is expected to take place over HEDNO, which has assets at a book value of some 3.5 billion euros. The stake that will be put under the hammer will either be 49 percent or 51 percent. It will be announced on December 16 when PPC's business plan is made public.

European and Chinese investors see large opportunities in HEDNO's 239,000-kilometer distribution network due to investments needed to upgrade it and the ability to chain onto the network 5G fiber optics cables that can provide an array of telecom and internet services. Germany's EON has shown an interest in the privatization, while Italy's Enel is also very likely to bid for the deal, as is Enedis, a subsidiary of France's EDF, and other Chinese companies.

HEDNO could also act as a base to expand into other parts of southeast Europe. This is also a feature of ADMIE, which is also being privatized with the sale of a 20 percent to 30 percent stake. China's State Grid, which currently owns 24 percent of the ADMIE, is interested in upping this position, while Italy's TERNA may also be interested.

As opposed to the above privatizations, the sale of a stake in Hellenic Petroleum remains unclear due to weak conditions in the oil market and a denial by major shareholder Latsis to jointly sell its stake in the company with the government after the previous failed attempt. 

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