Scandal with privatization of Heraklion port for 300 thousand euros

The Greek authorities have transferred 67% of the shares of the port of Heraklion (Crete) to private investors for a symbolic sum of 300 thousand euros, which caused outrage among the opposition and accusations of corruption against the officials involved in the privatization.

Deputy Minister of Shipping and Island Policy Stefanos Gikas stressed that with the transfer of 67% of the shares in concession to a private investor, the port of Heraklion, as well as the construction of the BOAK road axis and the new airport in Kastelli, will be elements of significant development for the whole of Crete.

Opposition parties have issued sharp criticism

Despite criticism, the bill to ratify the concession agreement for the use and operation of certain facilities and assets in the port of Heraklion was passed by a majority vote in parliament (the majority being New Democracy MPs).

In response to the main points of criticism from the opposition who voted against the bill: they all voted against it, calling it “sale”, very low price, losses for the state, poor competition methods and lack of transparency. Gikas responded that as of 2021, the Greek Investment Fund has approved the proposal to sell 67% of the shares of the Heraklion Port Authority through an international tender procedure in accordance with the regulations.

The pre-contractual review by the Court of Auditors was of primary importance, it ruled in favour of the legality of the procedure, and thus the Greek Fund proceeded to conclude the share purchase agreement with the preferred investor. We are talking about the company GRIMALDI and Minoan Lines Shipping Limited.

“This company, thanks to its activities since the acquisition of Minoan Lines, is well known in the city of Heraklion, and even if many representatives of the opposition express doubts about the concentration in one company of these two qualities – the management of the port and the operation of key ferry services – it turns out that this coincidence has its advantages, which did not arise in a secret or privileged way, but after a competitive process with the approval of all the competent bodies and the competition committee.

This investor's offer was the best, and it was only for reasons of public interest that it was chosen and not any other. After all, offers are specific and are conditioned by the special rules of the market and its own valuations. And from all the offers submitted, only the most advantageous is chosen. Everything else remains in the realm of imagination and cannot be assessed.”– the deputy minister emphasized.

He also noted that these contracts do not provide for the transfer of property rights, “therefore, when these cries are heard, the exaggerations about the sale or cession of land, or of our sovereign rights, are false”he added, referring to a specific concession that concerns only the assignment of rights of use and exploitation for a certain period of time, forty years, of specific and exclusively defined areas and facilities of the Heraklion Port Authority. The new port authority, in which 67% of the shares are owned by a private party and 33% remains with the state, is granted a specific concession area located within the port area, as described in the contract.

85% of the income is received by the Municipality of Heraklion.

At this stage, Mr. Ghikas presented a legislative improvement, according to which 85% of the total state income will be attributed to the Heraklion Municipality. “This is not a small amount at all. According to in our opinionit will exceed 300,000-350,0000 euros“There are also examples of Thessaloniki and Piraeus,” he said.

In addition, in response to criticism “cheap price” He said it was “unreasonable” because the price was a multiple higher than the corresponding valuation based on indicators such as EBITDA, which stands for a company's earnings before interest, taxes, depreciation and amortization. Financial analysts said that 80 million euros was 31 times more than those ratios required, and that if similar ports in similar companies were involved, the state would receive no more than 30 million.

Criticism of the opposition

Sharply criticizing the government's decision “New Democracy” hand over Heraklion port to private hands, parliamentary representative SYRIZA-PS Nikos Pappas stated that it sells “port for 5 kopecks”He also stated that “93% of ports in the world are under state control”and noted that the argument that the port would be open to competition did not hold water because “Ports are natural monopolies, they are not subject to competition rules.” Another port will not be built near the port of Heraklion in order to reduce prices”– he said.

“IN PASOK “over time, we believe that there are too many responsibilities – functions where the state cannot be a simple administrator. One of them is the ports. Obviously, there are ways to manage them better, and concessions are one of them. In other European countries, a balance has been found. Everywhere, the state retains ownership and concessions the operation, which it controls within certain limits. You can deny it in communication, but what you are doing is privatization,” – said PASOK representative in parliament Paris Koukoulopoulos. “I wonder what this means in practice when the shipping service provider also takes over the management of the port? “Yannis treats and Yiannis drinks – if we can interpret it in Russian proverbs, then as a variant of “He treats himself”). How exactly will the notorious competition that you adhere to be ensured? There is a risk of the emergence of not only an oligopoly, but also a monopoly,” – he said, addressing the members of the government.

On behalf of KKE MP Nikos Karathanasopoulos stated that all the concessions, privatisations and partnerships concluded by ND, PASOK and SYRIZA had one thing in common: they were contracts in the interests of the so-called “investors”, citing as examples the privatisation of regional airports “FRAPORT” under SYRIZA or the controversial contract of TRAINOSE with “Ferrovie dello Stato”. In this regard, he stated that now the Grimaldi Group, which is also active in the shipping sector, will be in a better position to manage the port of Heraklion than competing operators operating in the shipping sector. He argued that the privatisation of the port of Heraklion will have a negative effect, i.e. more expensive agricultural products transported from Crete, as well as an increase in services and benefits.

Mr. Bubas, representative of the party ““The Greek Solution”stressed that his party is against selling ports of great geostrategic importance for national reasons at such a price for so many years. He expressed concern about the price of 80 million euros and stressed that the quality of labor relations is not guaranteed, the local government does not play an active role, so it cannot impose municipal taxes, and the concession for this group, which is active in the shipping industry, is nothing more than a scam.

Parliamentary representative Nike Komnenos Deveroudis claimed that the port of Heraklion is being “sold off” and the Greek people are witnessing a well-organised government plan to eliminate the public character of the ports, in full accordance with the privatisation of airports and our motorways.

The New Democracy government's ideological obsession with privatization and the state's refusal to participate in infrastructure planning is discussed by Patty Perka of “New Left”»: “This is privatization. They think that everything will go better if we stop dealing with them and if the private sector takes over everything. And we are being saved. Based on the additional funds that will come in, you are giving away 67% of a port of strategic importance, of key importance – its location is very important, both in terms of containers and passenger traffic – for 80 million euros.”.

Parliamentary representative “Eleftherias Eleftherias” Alexandros Kazamias stressed that the model presented in the concession agreement is guided by one main priority and only one: to transfer all these centers of production of the country's wealth to private entrepreneurs in order to privatize them and receive any profit that the state can extract from this privatization process. “This model is disastrous and unfortunately leads to the alienation of the country's assets to the interests of private individuals who do not properly care for workers, the environment or local communities, and any concessions are not in the public interest.”” he added, clarifying his criticism of the issue of state supervision of the contract and the independent engineer who will play a very important role, but without control.

“We are playing the same game again – spectators, concessions, concessions, sales. This is an easy solution for a state that is essentially bankrupt,” – says Al. Zervas from “Spartans”.

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