The title of this article will cause many readers to raise an eyebrow. The impact of the financial crisis of 2008-2009 on the Greek economy has been well documented. At the end of 2013, the country’s GDP had shrunk for the fifth year in a row while the latest official figures reveal a 28 per cent rate of unemployment (rising to 60 per cent for those under 25).

Despite continuing difficulties in the Greek economy, however, the decline in GDP slowed down during the fourth quarter of 2103, and it is forecast that in 2014, Greece may be back on the path to growth. In fact, in April 2014, Greece issued its first bonds since its 2010 bailout, marking its re-entry into the capital markets. At the same time the re-capitalisation of Greece’s banks is underway with impressive results seen so far. Big institutional investors and hedge funds are lining up to invest in the Greek financial market and bring back the liquidity so badly needed for the development of infrastructure projects.

More importantly, investors are returning and the country has a great deal of potential to unlock via prospective investments in the energy and infrastructure sectors. ‘Over the last few years many Greek energy projects have been delayed or shelved’ says Simon Currie, global head of energy at Norton Rose Fulbright, ‘due to the crisis and investor sentiment’ but he believes that ‘the conditions are now conducive to the development and financing of economically efficient projects such as island interconnectors and renewable energy projects on islands which will help displace inefficient and expensive oil-fired generation. The Transadriatic Pipeline will happen as part of the Southern Gas Corridor which enhances the diversity of gas supplies for Europe.’


Natural gas pipelines

The €1.5 billion Transadriatic Pipeline (TAP) is the flagship project for Greece. It crosses the northern territory of Greece from the Greek-Turkish border to Albania, continues across southern Albania and, through a subsea pipeline, connects to the Italian natural gas transmission system. TAP is considered the most important element of a supply chain that, together with the Trans-Anatolian Pipeline (TANAP), will link the Shaz-Deniz II natural gas field in Azerbaijan with the natural gas markets of Central Europe, implementing the longawaited Southern Gas Corridor.

As a result of this project, Greece will become a key transit country for the Southern Gas Corridor. Projects that were postponed now seem more realistic, creating the conditions for Greece to become a real energy hub.

Dimitris Assimakis, partner at Norton Rose Fulbright Greece and head of the Athens energy team adds that ‘a number of other gas infrastructure projects are planned, such as the Ionian-Adriatic Pipeline and the Interconnector Greece- Bulgaria (ICGB), as additions to or independently from TAP’. For Greece, the ICGB project involves the development of a natural gas pipeline capable of reverse flow, able to direct natural gas imported from multiple sources (e.g. Middle East, Caspian and North Africa regions) to the South East European gas markets through the existing and future interconnection of the Turkish, Greek and Italian gas networks and relevant LNG systems. ICGB is at an advanced stage of development and a Memorandum of Understanding and Cooperation has already been signed with TAP, aiming ‘at establishing … technical cooperation in order to further develop strategic infrastructure in the region’.

Most recently (March 2014), the state-owned Public Gas Company (DEPA by its Greek acronym) issued an international tender for a feasibility study for the Eastern Mediterranean Pipeline to be conducted. The pipeline is intended to carry 8bcm per year of Israeli and Cypriot gas through offshore pipelines (via the island of Crete) to the Greek mainland and then on to Europe.

The aforementioned projects are considered by the EU Commission as projects of common interest (PCIs). The list of PCIs was presented on 14 October 2013 and covers projects which are intended to be launched between 2014 and 2020. In the month following the presentation of the list of PCIs, the European Parliament adopted the regulation for the Connecting Europe Facility that aims to accelerate investment in trans-European networks, to leverage funding from both public and private sectors and contribute to the EU’s mid-term and long-term decarbonisation objectives.

Natural gas storage facilities

Another benefit for Greece in becoming a new entry point for natural gas targeting the European markets could be the development of gas storage facilities. Currently Greece does not have any storage facility but it is well placed geographically to develop the appropriate infrastructure to secure additional reserves for Europe in case of need. There are three prospects in that area:

  • the conversion of the South Kavala depleted natural gas field into a gas storage facility to be developed through a public tender by the Hellenic Republic Asset Development Fund (HRADF)
  • the development of €500m floating storage and regasification unit (FSRU) by DEPA near the port of Kavala with a capacity of up to 5bcm per annum
  • the development of an FSRU by the Copelouzos Group close to the port of Alexandroupolis. Initial plans anticipate the construction of an FSRU with annual capacity of 2.5 bcm.

All the above storage facilities would be capable of receiving natural gas from different sources, be that from Russia through the existing infrastructure (either from Bulgaria or Turkey), from Shah Deniz II (through the TANAP/TAP chain) or in LNG form from Sonatrach that is, currently, feeding the only Greek LNG facility in the island of Revythoussa.

Other natural gas projects

In addition to energy infrastructure projects, foreign investors have shown interest in the midstream sector and the wholesale market, which shows that Greece is becoming an international hub for natural gas.

This is evident from the recent acquisition of the Greek Natural Gas Transmission System Operator (DESFA by its Greek acronym) by SOCAR, the state-owned oil & gas company of Azerbaijan. The acquisition, which is awaiting clearance from the EU competition authorities, has signalled the European-focused approach of SOCAR (which is also one of the main stakeholders in TAP and TANAP).

DESFA will be (barring any competition issues raised by the EU) one of the most successful privatisations carried out by the Greek state through HRADF, which has an impressive pipeline of privatisation projects. Generally, and without taking into account geopolitics, the price of natural gas is directly linked to the distance it has had to travel and the transportation mode from the producing country to the consumer markets. Europe (and Greece in particular, through transportation systems in Bulgaria and Turkey) is in close proximity to the world’s largest producer of natural gas, namely Russia. However, security of supply is an issue for the European market and the EU has sought to diversify its sources of natural gas, travelling to other parts of the world and as a result paying higher gas prices. This makes new supply routes within Europe a welcome development.

In the wholesale market, the recent agreement of Gazprom with DEPA to reduce the price of natural gas imported from Russia (which covers more than 50 per cent of the total consumption) by 15 per cent for a period of 10 years (commencing retroactively from July 2013) should prove an additional incentive for attracting new strategic investors and/or kick off new investments in the power co-generation sector. It will also add value to DEPA, the privatisation of which is expected to be re-tendered in the near future.

For the time being, we have recently witnessed two significant deals:

  • the strategic investment of Qatar Petroleum International that was competed and announced on 5 March 2014 to acquire a 25 per cent stake in the 435MW CCGT Heron II
  • the completion of the refinancing of the 436.6 MW Korinthos Power CCGT through a bond loan issue (on which Norton Rose Fulbright advised the finance parties).

These transactions signify that the natural gas-fired electricity generation sector is promising for international investors and that financial institutions are now ready to provide the appropriate level of liquidity to projects that are well structured.

As ‘the long awaited Greek banks recapitalisation programme is close to completion’ Dimitris Assimakis believes that ‘this positive development is reasonably expected to facilitate the funding of energy infrastructure and power generating projects’.

Exploration and production

Another indicator that Greece is making good progress is the way the Government has handled exploration and production (E&P) prospects. Following the recent discovery of the Leviathan gas field, one of the world’s largest offshore gas finds of the past decade and located at the Levantin basin and adjacent to the Aegean Sea, a heated debate about the oil and gas prospects in Greek offshore waters has been sparked.

Despite political pressure the Ministry of Environment, Energy and Climate Change (YPEKA by its Greek acronym) has followed a systematic approach in line with international best industry standards and, so far, has taken all the necessary steps so that Greece does not face the ‘resource curse’ that new energy players often experience.

A legal framework was put in place through the enactment of Law 4001/2011 to provide for a new attractive entrepreneurial environment that, foremost, will provide for tax and regulatory certainty. Accordingly, Law 4001/2011 introduced a flat 20 per cent special income tax and a 5 per cent regional tax that the producer of hydrocarbons has to pay, without any additional ordinary or extraordinary contribution, duty or other encumbrance of any kind in favour of the State or any other third party.

The same law also allowed for the first time the conduct of non-exclusive seismic surveys by specialised companies, at their own expense but with the right to sell to third parties the results of the seismic surveys. Petroleum Geo-Services, the Norwegian company that is a leader in such services, won an international tender in 2012 to survey the areas of Greece (some for the first time) that have hydrocarbon potentials and, according to a statement by YPEKA in January 2014, ‘a preliminary assessment of the data shows interesting geological structures bearing significant similarities to areas in neighbouring countries which already produce hydrocarbons (Albania, Italy)’. In parallel, the Government completed an ‘open door’ licensing round to grant rights for the exploration and exploitation of hydrocarbons in three more matured areas, the Gulf of Patraikos (offshore), Katakolo (offshore) and Ioannina (onshore).

Similarly, in April 2014, Enel, the Italian energy giant, submitted three applications to search for gas and oil in three onshore areas in Western Greece and Epirus. Pursuant to Law 4001/2011, the State will decide whether to grant such permission to Enel and then open the procedure to other oil and gas firms to submit offers for the same areas.

The Government also eased the way in which Energean Oil & Gas, the only producing company in Greece, conducts its business by allowing it, for the first time, to sell to third parties (and not only to the State-affiliated Hellenic Petroleum). Energean recently welcomed the US fund Third Point as a strategic investor and signed a six year offtake agreement with BP, both deals evidencing that the prospects do look good.

It seems that the interest in the E&P sector in Greece is real. Whether E&P activity will materialise from this interest is a question that we will be able to answer soon as Mr Maniatis, the YPEKA Minister, recently revealed (May 2014) that the international tenders for the offshore blocks in the Ionian Sea and south of Crete are imminent and should be expected within summer 2014.

Privatisation of part of PPC

The Greek States hopes that the part privatisation of the Public Power Corporation (PPC) will attract similar levels of interest from international investors. The draft law was presented to the public in the beginning of March 2014. The plan envisages the divestiture of approximately 30 per cent of PPC covering 2 million customers, 11 power plant units with a total installed capacity of 2,363MW, six coal mines and about 3,000 employees. An international tender is expected during the first quarter of 2015 and the signals, so far, are positive with utilities companies from Germany, France, Italy, the US and Japan rumoured to be interested to acquire alone or together with local players the so called ‘small’ PPC.

Privatisation of ADMIE

Another privatisation expected to attract significant interest is that of the Independent Power Transmission Operator (IPTO or ADMIE by its Greek acronym).

The draft legislation for ADMIE’s, currently a 100 per cent subsidiary of PPC, privatisation, is being debated in the Greek Parliament and the Greek State intends to offer to private investors 66 per cent of ADMIE’s shares.

According to reports, the Greek State has a preliminary evaluation of €1.5bn and a number of companies have already expressed interest, including the Italian Terna whose CEO, Flavio Cattaneo, stated in a hearing in the Senate Committee on Industry in March 2014 that the company is looking carefully at the Greek privatisations.

Electricity interconnectors

The privatisation of ADMIE is of greater interest due to the potential it offers for the interconnection of regional electricity systems. At the time of writing, there are at least three proposals by private investors to develop mega-renewables projects (including wind farms and solar PVs of more than 1GW of installed capacity) on the island of Crete and the appropriate infrastructure to transfer the electricity generated there to mainland Greece via a subsea electricity interconnector.

ADMIE has also included in its 10 year plan the development of a conceptually similar project. Clearly, it is not possible to install 3,000MW of renewable energy sector capacity in Crete from one day to the next and submerge three or four subsea cables. The decision by the Inter-ministerial Committee of Strategic Investments in February 2014 to remove from the list of ‘fast track’ investments two projects that envisaged the development of two 1GW electricity interconnectors demonstrates the political will to add value to ADMIE’s prospects. Another ambitious interconnector project directly linked to the completion of the Cretemainland interconnector is the EuroAsia Interconnector that is being developed by regional market players such as PPC, Quantum Energy, the Bank of Cyprus and the Israel Electric Corporation. The 1,000km, 2,000MW EuroAsia interconnector will be the world’s longest subsea energy link, connecting the developing power generation markets of Israel and Cyprus with continental Europe through the island of Crete.

Eastern Mediterranean basin

The Eastern Mediterranean Pipeline and the EuroAsia interconnector are two examples of the importance of the Eastern Mediterranean basin in the new European energy mix. The recent natural gas vast discoveries offshore Israel and, to a lesser extent, offshore Cyprus have created a new production area that would help diversify Europe’s supply sources and limit interruptions in the supply chain.


Much has been written and debated on the use of subsidies offered by the Greek State to promote the development of the renewable energy sector (RES), particularly for wind farms in the beginning, and lately in respect of photovoltaic projects. Hundreds of small-scale projects are being developed by private investors and considered by the Regulatory Authority for Energy (RAE) and at one point an ambitious 10GW PV project was put on the table.

It is estimated that the total installed capacity of RES in the Greek energy system should reach approximately 7,500MW in order to achieve the 20-20-20 targets (i.e. 20 per cent reduction in EU greenhouse gas emissions from 1990 levels; 20 per cent share in the of EU energy consumption produced from RES and a 20 per cent improvement in the EU’s energy efficiency).

In order to achieve these targets, the Greek National Renewable Energy Action Plan envisages ‘the installation of almost 7,5GW of wind energy plants […], together with 2,2GW of PVs, 250MW of CSP plants, 120 MW of geothermal energy, 250MW of bio-energy installations (biogas and solid biomass), 250MW of small hydro plants and an additional capacity of large hydro plants (350 MW) and pumped storage plants (880 MW), resulting in a 40 per cent RES share in electricity production’.

An additional 10GW installed capacity by 2020 may seem impossible. The truth, however, is that given the right economic conditions and sufficient liquidity in the market, there are many greenfield RES projects ready for development. According to the RES registry maintained by YPEKA (RES Registry), as of 31 March 2013, RES projects with installed capacity of 29,914,09MW had received a generation licence from RAE. Clearly, not all of them are at the appropriate maturity level but the ones that are well structured with solid fundamental parameters and strong sponsor support have a lot to gain.

To facilitate investment and rationalise the RES market in Greece, the Government is implementing a market reform. The main theme of the new legislation (passed in late March) provides for a significant reduction in the subsidies previously offered to photovoltaic projects and wind-farms and requires investors to return to the State a proportion of past revenues. This may sound like a very harsh measure for a country aiming to stimulate investment, but for a market to be attractive in the eyes of investors it has first to be rational


Waste to management

In a further effort to promote an eco-friendly agenda, the Greek State is aggressively promoting investment in waste management facilities. A significant PPP Waste Management programme is being implemented under the auspices of the Special Secretariat for Public Private Partnerships and in the recent months, a number of projects have been awarded to contractors or a preferred bidder has been selected.

The price tag for each waste management PPP may seem low (ranging from $50m to $250m+) but the overall capital expenditure for the whole country is significant as there were almost 50 waste management PPP projects under consideration and eligible to draw funding from the National Strategic Reference Framework (NSRF) 2007-2013 with total investment costs close to €2 billion.


On a similarly positive note, the four toll roads that reached financial close between 2006 and 2008 but had to halt construction following the global financial crisis are now back on track. The parties involved (Greek government, sponsors, lenders and the EU) agreed on a refinancing package that has resulted in the construction works commencing again with the aim of completing all roads by the end of 2015.

With these successful restructurings in mind, the Greek government is hoping to capitalise on the momentum that has been generated and to complete other high-profile privatisations.


At the beginning of March, HRADF launched the tender for the privatisation of the port of Piraeus which is the largest port in Greece and one of the largest ports in Europe. The privatisation will take the form of a concession and at the initial stage, six investment groups expressed an interest, including the Chinese COSCO which already operates a 35 year concession in respect of the existing two-pier container terminal.

Similarly, in mid-April, the privatisation of the port of Thessaloniki was launched by HRADF through an international tender to sell 67 per cent of the shares of the ‘Thessaloniki Port Authority’ that has the right to manage and operate the port until 2051. It is expected that the tender will attract the interest of significant market players, including the Russian Railways (RZD) which has a strategic plan to establish an exit point to the Mediterranean Sea for its country’s products by acquiring the port of Thessaloniki and, of course, the Greek railway network.

Railway investment

The privatisation of Greece’s railway infrastructure is already far advanced. TRAINOSE, the only railway undertaking in Greece providing suburban, regional, national and international freight and passengers rail transport services, combined transport, related logistics services and some international coach transport services, and the rolling stock operating company (ROSCO) which will provide rolling stock maintenance, are already in the second stage of the privatisation process in which potential investors are evaluating the assets, liabilities and prospects in order to make final binding offers. The companies interested in TRAINOSE include a consortium of RZD and Greece’s GEK TERNA; France’s SNCF; and the Romanian Grup Feroviar Roman (GFR). Companies that have expressed interest in acquiring 100 per cent of the ROSCO shares include a consortium of RZD and GEK TERNA; SIEMENS SA; and a consortium comprising Alstom Transport SA and Greece’s DAMCO Energy SA.


The privatisation of Greece’s regional airports has now reached phase two, with seven investment entities participating in the tender process for the concessions of the management, operation and maintenance of the regional airports. These have been divided into two clusters to make the investment more attractive.

In addition to the regional airports, the Greek State has kicked off the international tender for the development of a new airport in Kasteli, Crete to replace the existing international airport at Heraklion. The anticipated development costs are in the region of €1bn and the terms of the international tender published on 15 May 2014 provide for a 35-year concession.


Finally, the long awaited privatisation of the most high-profile Greek project is near completion. On 31 March 2014, HRADF awarded to an international consortium (led by Greek construction company Lamda Development and backed by China’s Fosun and Abu Dhabibased property firm Al Maabar) the status of preferred bidder for a 99-year property lease to develop Europe’s largest urban plot at the site of Hellinikon, the former Athens airport.

The consortium made an improved final offer of €915m with an undertaking to invest an amount equal to €5.7 billion, out of which €1.25 billion correspond to the essential infrastructure and metropolitan park costs, which will be exclusively assumed by the consortium.

The grand plan envisages the transformation of the 620-hectare plot to an urban complex of house zones, hotels, shopping malls, theme parks, art and culture museums, open cultural spaces, health and life centres, sport and leisure facilities, a modern business, education and research hub, as well as an upgrade of the existing marina and the development of a unique beachfront area.


The successful implementation of all of the above projects is, clearly, a significant challenge. To date, the privatisation element has been debateable as the country was under pressure to monetise its assets at all costs, risking a sell-off akin to a fire sale. At the same time, restrictions or obstacles imposed by supra-national authorities made such privatisations impossible.

Today, it seems that the attitude towards Greek assets has changed and the conditions are favourable. The macroeconomics are improving and highprofile projects are back on track. Whether or not privatisation projects will be completed and private infrastructure plans are implemented will also depend on the willingness of the parties involved to make the right concessions. This extends to everyone: the prospective investors, the Greek State and the regulatory authorities (local and supra-national). Whatever happens, the fact remains that Greece is now a land of opportunity.