Hellenic ports tender results to delay on private bidders request

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

18 Mar 2008

Greece's largest port facility Piraeus (OLP) will delay announcing the winner of a tender to upgrade and manage its cargo facilities at the request of bidders, a company official said on Friday. "The announcement has been postponed until May 9, to satisfy the request of some of the bidders who wanted an extension of the deadline," said the official, who declined to be named. OLP had planned to announce the winner on March 19. "Some of the interested parties risked missing the deadline to submit bids because of paperwork backlogs," the official said.But this is just the tip of the iceberg. Sources within the government and from the market indicate that a number of interested bidders have been having trouble reaching an agreement to form the necessary alliances. As a result, Dubai Ports World is expected to drop its bid for Piraeus port and focus its efforts in securing a concession contract for the Port of Thessalonica in northern Hellas, like its rival Hutchinson Whampoa. The same sources have said that an alliance is soon to be forged between Hutchinson, Maersk (APM Terminals) and Cosco, to outbid competition in the port of Piraeus contract. But concern is rising from one of these companies, touted as the most likely winner of the bidding process, whose officials have expressed their doubts, claiming that the bidding process revolves around something (i.e. container terminal operation), for which the current legislation presents gaps. Among the other private parties that have expressed their interest in participating to the process, Singapore's PSA and Spanish construction conglomerate Dragados remain active. But as anyone can realize the game of poker has already began and is unfolding at a rapid pace. Meanwhile, dock workers are still opposing the whole privatization process, repeatedly staging strikes and walkouts from overtime labor in both ports since the beginning of the year. As a result, containers and financial losses alike have been piling up at both facilities, seriously damaging the country's import-export business. Hellas is seeking investors to operate and modernize the country's two major ports infrastructure and facilities, in an effort to boost cargo business and transform both ports in regional transshipment hubs. The winners will not only bring investments and possibly some major lines in the ports, but also secure a 30-year concession period as sole operators of the ports. OLP has an estimated market value of 462 million euros, while the port of Thessalonica is worth approximately 220 million euros. According to the plans, the contract which will be awarded shall require a minimum annual rent, while a further one-time 50 million euros payment by the winning bidder shall be included in the deal. Piraeus and the contractor will also split annual profits if the operator's return-on-assets ratio exceeds 15 per cent.