Shipping container cranes line the Pireaus cargo port in Pireaus, Greece, on Feb. 11, 2015. (Photo : Getty Images)
Chinese shipping giant Cosco is a step closer to consolidating its hold over the key Greek port of Piraeus this week after being named as the sole candidate to acquire a majority stake in Greece’s biggest harbor.
Greek government officials said they would ask Cosco for an improved financial offer to be considered within the week after two shipping rivals dropped out of the bidding in the long-delayed sale, according to a report by China Daily.
"For the country's biggest port and one of the biggest in the Mediterranean and in Europe and with such prospects, it's not the best result in the final phase for there to be only one offer," Greece's Shipping Minister Theodoros Dritsas said Friday in an interview on state-run broadcaster ERT.
Dritsas noted that the government, led by Prime Minister Alexis Tsipras, would still do its utmost to ensure Greece will get the best possible price for a majority stake in the port, which experts see as crucial to Beijing's plans to expand the reach of Chinese goods in the European market.
Cosco, a state-owned firm listed in Hong Kong, was the sole confirmed bidder for the 67-percent stake in Piraeus Port Authority SA, where Cosco already runs container operations at two piers. APM Terminals, owned by Danish shipping conglomerate AP Moller-Maersk A/S, and Philippines-based port operator International Container Terminal Services Inc. were also short-listed but did not put in a binding bud.
The pending sale of stake in the northern Greek port of Thessaloniki, the second biggest in the country, may have diverted APM Terminal's attention there, said George Tzogopoulos, a research fellow at Athens-based Hellenic Foundation for European and Foreign Policy.
Greece's bid to improve the offer is more of a face-saving measure for the government and allow Cosco a chance to improve its offer "a bit," he said.
"Greece pushed its luck for more than two years until starting the privatization," Tzogopoulos added. "I don't think there is anything that might cause a serious disagreement given that Cosco's waited for such a long time."
No figures for Cosco's bid were provided, but based on the current market value of the port at approximately 360 million euros, the 67-percent stake is estimated to be around 240 million euros.
Analysts see the Chinese investment in Piraeus as part of China's One Belt, One Road initiative, which seeks the creation of a 21st century version of the Silk Road. Since Cosco started container operations in 2009, traffic surged at the port, making it one of the fastest growing in the world. In his visit to Greece in June 2015, Premier Li Keqiang described Piraeus as "China's gateway to Europe."
The Piraeus sale is also seen as a gauge for Greece's lackluster state asset sales program, a key source of revenue for the country qualifying in rescue funds from its European partners and the International Monetary Fund (IMF).
A win by Cosco could lead to more Chinese investment, including plans for a new freight and logistics center in Athens and a new airport in the island of Crete, according to China Daily.
Piraeus may also be the first state asset sale by Tsipras's government since the leftist prime minister assumed office a year ago under the promise of halting privatizations and undoing the two bailout agreements that forced higher taxes and cuts in wages and pensions on Greeks. He has since tempered his tone after being forced to accept a new 86 billion euro bailout to keep Greece within the Eurozone.
In December, the government wound up previously agreed deals for the privatization of 14 regional airports and the sale of a seaside resort in Athens. Both deals have been shuttered after Tsipras came to power.
Cosco gained the license to operate Pier II in Piraeus in 2008 for 30 years for 490 million euros. The deal has since become a regular campaign issue as Greek politicians court votes from union workers, including those working at the docks, unhappy of the country's austerity measures.
Foreign investment in Greece has dried up following six years of political turmoil and fears of financial collapse. On the same day Cosco was announced as the only bidder in the Piraeus stake, Eldorado Gold, a Vancouver-based gold producer, said it is suspending its operations in Greece in part due to an "openly confrontational attitude" with the energy ministry.
Tzogopoulos said the Piraeus sale to Cosco will serve as a framework for additional Chinese investment in Greece, where six years of near-financial collapse has led to record unemployment rates.
"China will now be prepared to invest more and these investments will contribute to Greece's growth," he added.
