I was hit by a powerful sense of unreality in reading today’s announcement that the European Investment Bank allocated a EUR 2 bln loan for Greece, of which EUR 1 bln will be spent on rail investment. This including upgrading the Patras-Athens-Thessaloniki-Promahonas line, developing a railway node at Acharnes, a freight complex at Thriassio and a rail link to the Neo Ikonio Container Terminal at Pireaus.
It should be mentioned that OSE, the Hellenic Railways Organisation, has a debt of over EUR 9 bln. Its 2008 turnover of EUR 195 mln was far outstripped by its operating loss of EUR 794 bln.
I have not seen an investment plan, business plan or turn-around plan for OSE. The government claims it wants to sell 49% of the business, including the management, to a strategic investor. Unless the government takes over the debt, and backs the potential investor to reduce and replace staff, I fail to see who could possibly be interested, or how such a partial privatisation could work.
The fact that the government has recently been asked by the Troika to take OSE’s debt directly onto its balance sheet, rather than treating OSE like a special-purpose vehicle, only worsens
Unless this investment somehow translates into a major demand for passenger and cargo traffic between Pireaus, Patras and
· The high debt of OSE means that adding a further EUR 1 bln, for an investment project that will take at least 3 years to complete, and then will not easily result in a direct return on investment, simply seems irresponsible at this point in Greece’s development.
· The terrain of
· The presence of a national highway which is currently being upgraded, and the relatively short distances between the three cities, means that road transport is very competitive against rail. What alternative returns would have been gained by simply expanding the road network, or investing in road transport, which is in fact the objective of the 2 PPP contracts? Why split the potential ROI between two competing transport forms, and invest in double infrastructure (road and rail) along both routes?
I am also continually wondering why Greek and the EIB do not examine and back alternative, more productive investments?
· A EUR 1 bln investment in Patras, Corinth or alternate locations on the Corinthian Gulf, to create and integrated cargo and high speed ferries port as well as bonded warehouses, commercial zones and manufacturing sites similar to the Jebel Ali Free Trade Zone. Such an industrial, trade and transport hub would be much easier to reach from
· A EUR 1 bln investment into
· A EUR 1 bln investment in renewable energy would bring far higher returns to
· A EUR 1 bln investment in modern, large-scale agriculture using geothermal energy and modern greenhouse technology (which requires almost no pesticides or chemicals) would create a new export sector, improve the trade balance, and create many places of employment. Each 100,000 m2 unit costs about EUR 20 mln, employs around 45 people, produces about 15 tonnes fruits and vegetables per day, and generates annual sales of about EUR 7-9 mln. This would literally revolutionise high-value agriculture in
· A EUR 1 bln investment in a high-technology IT and energy incubator for entrepreneurs of any nationality who wanted to set up in
First Steps in Consolidating Greek Debt: OSE/OASA
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