Cosco ordered to pay back Piraeus EU aid

Cosco Pacific, through its Piraeus Container Terminal, has been ordered to pay back concession-related ‘advantages’ to the Greek state.

Back in 2012, the Commission ruled on claims of State aid made by a number of parties, including the Prefect of Piraeus, the Federation of Greek Port Workers and International Dockworkers Council. After a three-year investigation it concluded that differences between the concession agreement and the contract notice did not constitute State aid, nor did fiscal measures related to the exemption from corporate income tax for goods, works and services provided to PCT outside Greece.

However, it found that “other fiscal advantages” did constitute State aid and then opened the floor to interested parties for their comment.

That process appears to have reached its conclusion with impeccable timing given the furore already in place in Greece surrounding it existing and planned concessions.

Using emotive terms like ‘advantage’ and ‘distortions of competition’, the EU is unequivocal in its latest findings: certain fiscal benefits – as yet undefined due to confidentiality issues – granted by Greece in favour of port operator Piraeus Container Terminal and parent company Cosco Pacific provided the beneficiaries with an “undue advantage over their competitors in breach of EU state aid rules”. Tax exemptions and preferential accounting treatment have both been singled out.

Going forward, Greece has been directed to “cease granting” these advantages to PCT.

What will this mean for the now re-invigorated – for this week at least – privatisation proposal of the ports of Piraeus and Thessaloniki? Cosco Pacific had been shortlisted for the purchase of two-thirds of the Port of Piraeus Authority, but no doubt under the expectation of similar favourable terms as in place at PCT.

The EC decision provides ample ammunition to the left-wing Syriza party to distance itself once again from Cosco Pacific and the privatisation process as the decisions in question were made by the former governing party.

This could mean that previously ostracised bidders get a second bite at the PCT concession process; will APM Terminals, Ports America, ICTSI and HPH throw their hats back in the ring, or is the Greek situation just too precarious?

After all, the Piraeus privatisation merry-go-round must be making even hardened operators dizzy. It took Cosco Pacific five years to get its concession, after one aborted tender in 2005. And as soon as it won the concession, re-negotiations and legal suits from unions swiftly followed. Given the latest developments and the EC’s interjection, this is one ride that many might choose to stay off.