COSCO Piraeus bid back on track

Comments by visiting official signal change in Greek government's attitude on stake sale

Comments by a visiting Greek official indicate that the bid by China Ocean Shipping (Group) Co for the Piraeus Port Authority, which has been on hold for about two months following the country's election, could be accepted in the next few weeks.

COSCO was one of five industry players, including the United States' largest port management company Ports America Inc, to show an interest in a 67 percent stake in Piraeus Port Authority in the second half of 2014.

The future of the deal became uncertain after voting in January that put hard-left Alexis Tsipras in the prime minister's office. He quickly suspended the privatization process.

Greek Deputy Prime Minister Yannis Dragasakis, who was part of a delegation that recently visited Beijing, told the official Xinhua News Agency that the privatization would be completed within weeks, with COSCO to be "an active participant" that "can make a very competitive offer".

Dragasakis says the process had been "slightly delayed" mainly because there was "a change in the public entity owning the port's shares due to the change in government in Greece".

For its part, COSCO has said that it is too early to forecast a result as there are other bidders.

Foreign Minister Wang Yi says in discussions with Greek Foreign Minister Nikos Kotzias that the two countries should cooperate more closely and make the Piraeus Port project an example of mutual benefit.

The U-turn in the Greek government's attitude may reflect the country's dire economic plight. The Wall Street Journal reported that Greek proposals due March 30 for a revised bailout program didn't have enough detail to satisfy international creditors.

Unless the plan is approved by the European Commission and creditors, the Greek government would not be able to get further bailouts.

The government was facing immediate salary and pension payments of 1.7 billion euros ($1.84 billion). It also needs to pay back a loan of 450 million euros by April 9.

Many have speculated that meeting these obligations would drain the country's remaining cash. The delegation's visit to Beijing has been widely interpreted as a financing trip.

Zhen Hong, secretary-general of the Shanghai International Shipping Institute, says that it is highly probable for COSCO to win the bid, because there has been a significant change in the Greek government's attitude. A winning bid would also bring COSCO more profits through its port management activities, which would be welcome at a time when bulk cargo rates remain sluggish globally.

COSCO Pacific, a subsidiary of COSCO Group and the fifth-largest container terminal operator in the world, has invested 4.3 billion euros in a 35-year management lease for the two piers at Piraeus Port, which it has been operating since June 2010. It was expected to create 1,000 jobs locally. The throughput capacity of the port was also expected to increase by 2.5 times.

COSCO Group's operating revenue last year exceeded 66 billion yuan ($10.62 billion; 9.9 billion euros), up just 1.15 percent year-on-year. The group says that it had only eked out that gain with a rapid response to market changes by adjusting its allocation of global shipping capacity and improving its regional route network.

Piraeus is the biggest port in the Mediterranean, with an annual capacity to handle more than 3.16 million 20-foot equivalent units, the size of a standard container.

Piraeus is also a strategic partner for various multinational manufacturing giants such as Hewlett-Packard Co and Huawei Technologies Co.

Zhong Nan contributed to this story.

shijing@chinadaily.com.cn