Azernews.Az

By Nigar Abbasova

The Hellenic Republic Asset Development Fund (HRADF) has applied to Azerbaijan’s energy giant SOCAR with a request to extend a term of a letter of guarantee under the tender on the acquisition of a share in the Greek gas network operator DESFA.

The meeting between the Greek side and representatives of SOCAR and Italian Spam Company was due on October 31.

SOCAR earlier agreed to extend a term until October 31, 2016. HRADF seeks to extend a term for a month more, while SOCAR wants to get a written guarantee from Greece before agreeing to the extension.

The cost of the share remains to be a stumbling-block between the sides.

Azerbaijani and Italian side believe that the price standing at €400 million for 66 percent shares of DESFA is overstated, mentioning that the price at €300 million may be considered adequate given the recent changes in the legislature.

SOCAR won a tender in 2013 on the purchase of a 66-percent stake in DESFA for 400 million euros ($446.3 million), with some 31 percent being acquired from the government of Greece and 35 percent (full share package) from Hellenic Petroleum.

The acquisition was stalled, when SOCAR faced EU’s anti-trust concerns and was ordered to sell 17 percent of DESFA to a third party so that its stake drops to 49 percent and satisfy EU competition authorities. Greece passed a law in July which raised DESFA's gas tariffs, further complicating the sale. Italian gas grid operator Snam is still interested in buying the 17 percent DESFA stake that SOCAR has to sell to satisfy EU conditions.

SOCAR had previously reiterated it would only go ahead with the deal should the cost was cut significantly given that a number of obstacles had emerged since it first agreed to buy DESFA in 2013.

Sale of DESFA is part of a privatization program required under Greece's three international bailouts since 2010.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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