Study: 2010 is Crunch time for Greek infrastructure

A new report looking ahead to prospects for Greek infrastructure investment in the first quarter of 2010 identifies the concession tender for Crete’s Kasteli airport as critical in a market suffering more than most.

In Greece, the gap between the number of public-private partnerships being planned and the number of these projects likely to go ahead has widened, according to a new report from business intelligence firm Business Monitor International. 

The “Greece Infrastructure Report Q1 2010” says a growing budget deficit and burdensome public debt have hampered the ability of the Greek government to tackle the recession with stimulus measures. Partly for this reason, the report concluded  that the outlook for infrastructure investment in the first quarter of next year remains “unchanged” compared with Q4 2009 when “little activity has been recorded”.    

The industry “took a heavy blow” when Hutchison Port Holdings walked away from the Thessaloniki port concession in December 2008, the report said. Having offered €419.5 million for the port’s cargo terminal, Hutchison withdrew interest without disclosing the reason why. The subsequent cancelation of the tender in March 2009 left the government to foot the bill.

A tender for the construction and concession of Kasteli airport in Crete is an “upcoming litmus test”, the report said. The tender invites would-be investors to build and manage the new €1 billion airport on the resort island. The government is contributing €220 million towards construction of the site and would hold a 55 percent stake in the operating company. Bidders would provide the bulk of the financing, own the remaining 45 percent of the operating company and operate the airport for 35 years. The bidding deadline is 9 February, 2010.             

Private sector involvement in Greek public projects has become “more important” for a number of reasons, the report said. These include: a government budget under strain from falling revenues; ballooning external debt slowing short to medium-term growth; revision of debt obligations and fiscal responsibilities; and a drying up of liquidity in the financial system.