Greece can secure badly needed private investment for public-private partnerships (PPPs) in infrastructure despite the Mediterranean country's poor record in their procurement, its economy minister said on Thursday.
Despite the launch of a 5.7 billion euro PPP programme five years ago, only one of 52 planned projects has gone through to implementation phase due to lack of technical and legal planning, Greek Economy Minister Louka Katseli told reporters.
"The programme was there but it was inactive, it was blocked," Katseli told a press briefing. "We now are promoting a 2 billion euro package of mature projects."
European governments have used concessions and public-private partnerships (PPPs) as a way to plough equity from construction companies and debt from banks into the development of expensive infrastructure projects, cutting down on short-term spending.
But the European sovereign debt crisis has made it more difficult and expensive to obtain long-term private financing for projects, testing the willingness of cash-strapped governments to throw their balance sheets behind projects.
"There has been no indication that there is a funding shortage to promote investments. The interest from investors is huge. What people are asking for is quick permitting, where things get blocked, in securing the land," Katseli said.
EU FUNDS
Undergoing its first recession since 1993 under the burden of a very heavy debt load, Greece faces an uphill struggle to sustain infrastructure spending to take advantage of about 20.4 billion euros of available EU funds between 2007 and 2013.
Greece absorbed just 3.6 percent of the funds available under the EU's National Strategic Reference Framework (NSRF) in 2009 and wants to increase that rate to 15 percent in 2010. PPPs would help it achieve this by attracting private investment [ID:nLDE61G0J3]
"The absorption rate is now 6.7 percent and we are looking to reach 8 percent by the end of June. We are working to exceed the 15 percent target, there is no delay," Katseli said.
Greece's efforts will affect the fortunes of Greek builders such as Ellaktor <HELr.AT>, J & P Avax <AVAr.AT> and GEK Terna <HRMr.AT> and the opportunities available to international construction groups such as Vinci <SGEF.PA> and Hochtief <HOTG.DE>.
In April, debt-laden euro zone peer Spain unveiled a 17 billion euro infrastructure spending plan, looking to attract private investment to boost its construction sector as it also struggles with high unemployment and a huge budget deficit. [ID:nLDE6360V2]
Katseli said Greece will examine which projects to procure as PPPs beyond the immediate 2 billion euro package, which calls for schools, courts and other social infrastructure buildings to be at final bidding stage by 2012.
The European Investment Bank is to play a key role in the PPP programme, pre-approving projects before tender and making more favourable project financing available terms to investors, Katseli said.
