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SOCAR extends DESFA's letter of guarantee

2 November 2016 12:08 (UTC+04:00)
SOCAR extends DESFA's letter of guarantee

By Nigar Abbasova

Azerbaijan’s state energy giant SOCAR has agreed 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 Azerbaijani company agreed to extend the term for another month, a source from the energy market told Trend.

Reportedly the sides are now seeking to come to a mutually acceptable decision. The Hellenic Republic Asset Development Fund (HRADF) earlier applied to SOCAR with a request to extend a term of a letter of guarantee. This is the second consecutive extension of a term while the guarantee letter was due to expire on September 30 and October 31.

The cost of the share in DESFA, that SOCAR is aimed to acquire, remains to be a stumbling-block between the sides. SOCAR won a tender in 2013 on the purchase of the stake in DESFA for €400 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.

Italian gas grid operator Snam is interested in buying the 17 percent DESFA stake that SOCAR has to sell to satisfy EU conditions.

Later in July 2015, Greece passed a law, which raised DESFA's gas tariffs, further complicating the sale. SOCAR had previously said it would only go ahead with the deal if the cost was cut significantly, given that a number of snags 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

Follow us on Twitter @AzerNewsAz

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