By Angeliki Koutantou
ATHENS (Reuters) - Greece's leftist government will clinch its first big privatisation deal when German airport operator Fraport (DE:FRAG) signs a 1.2 billion euro (£872.3 million) deal this month to lease and manage 14 provincial airports, the head of the country's privatisation fund said on Tuesday.
The deal, under negotiation before the leftist Syriza party won a general election in January and froze asset sales, will be the first major transaction completed under Prime Minister Alexis Tsipras.
"We will proceed with signing the agreement with Fraport within the coming 10 days," the head of privatisation agency HRADF, Stergios Pitsiorlas, told a news conference.
He said he expected to raise 3 billion euros from selling state assets next year. That is nearly double the figure projected in the 2016 budget, but less than the 3.7 billion euro target set in the country's EU/IMF bailout programme.
Pitsiorlas said he had postponed until Dec. 21 the deadline for binding bids for a 51 percent stake in the port of Piraeus (AT:OLPr), in which China's COSCO (HK:1199) and Denmark's A.P. Moeller Maersk (CO:MAERSKb) are interested.
Privatisations have been a key condition of Greece's international bailouts since 2010 but Athens has raised only about 3.5 billion euros from the programme so far versus an original target of 50 billion euros amid bureaucratic delays and lack of political will.
Pitsiorlas also said that Belgium's Fluxys (BR:FLUX) and Italy's SNAM (MI:SRG) had expressed interest in buying a stake in state-owned natural gas grid operator DESFA from Azerbaijan's SOCAR.
Greece agreed in 2013 to sell 66 percent of DESFA to SOCAR but the deal has been delayed due to EU antitrust concerns. Once the deal concludes, SOCAR will have to divest about 17 percent of the firm to a third party to address the EU's concerns.
TOURIST DESTINATIONS
Fraport, named preferred bidder late last year, and its Greek partner, energy firm Copelouzos, agreed to pay a lump sum of 1.2 billion euros and annual rental fees of about 23 million euros for the 40-year lease of airports in popular tourist locations, including Corfu.
Under a bailout deal accepted by Tsipras in July, Greece has to set up a new privatisation fund and use its assets to generate revenue of 50 billion euros over the lifetime of the bailout loans. Greece will use part of the proceeds to pay down its mountain debt and a quarter to boost investments.
The country has to finalise the structure and the governance of the new fund this month as part of a second set of reform milestones to qualify for 1 billion euros in bailout money.
Pitsiorlas said Greece was discussing the issue with the lenders and expected the new fund to be set up by April 2016.
Mission chiefs of the creditor institutions were in Athens on Tuesday for talks with ministers on setting up the new fund under EU supervision, as well as dealing with non-performing business loans and the public sector pay grid.