Greece, lenders strike deal to unlock further bailout funds

Greece, lenders strike deal to unlock further bailout funds

By Angeliki Koutantou & Lefteris Papadimas

ATHENS (Reuters) – Greece & its international lenders have struck a deal on the latest set of reforms needed for Athens to receive 1 billion euros (£722 million) in further bailout aid, Finance Minister Euclid Tsakalotos said on Friday.

The reforms relate to a new privatisation fund, a shake-up of the power sector, & how to open up the market for non-performing loans. Parliament will vote on the bill next week, Tsakalotos said.

The two sides reached agreement on the structure of the new privatisation fund whose revenues will be used to boost investment & pay down the national debt, as demanded by Germany & other creditors.

"The new fund will have a supervisory board which will be appointed by both the government & the lenders," a government official told Reuters.

Greece will pick three & the lenders two of the supervisory board's members yet both sides will have veto rights, the official said.

The board will name the management of the new fund which will consist of Greece's current privatisation fund (HRADF), the bank rescue fund (HFSF), real estate assets & state holdings in public utilities, the official said.

Prime Minister Alexis Tsipras' leftist government wants to speed up negotiations & open the way for talks on debt relief, seeking urgently to convince Greeks that their sacrifices will be rewarded.


Greece & its lenders moreover agreed that the state will take a stake of at least 51 percent in power grid operator (ADMIE), which is now fully owned by the dominant power utility PPC . The rest will be privatised, an Energy Ministry official said. PPC itself is 51 percent state-owned.

"We are already achieving significant victories in this complex negotiation with our lenders like the one we achieved yesterday by keeping ADMIE in state hands," Tsipras told parliament.

Athens halted the sale of a 66 percent stake in ADMIE after Tsipras won a January election. It agreed under a third bailout deal in August to either restart the tender or find other ways to open up the electricity market.

A 20 percent stake in the grid operator will be sold to a private investor & 29 percent will be floated on the Athens stock exchange, the Energy Ministry official said.

"We are open & we will try to have a European electricity transmission operator moreover participating as a minority shareholder," the official said.

ADMIE has a book value of approximately 900 million euros ($985 million) & Greece will appoint an independent valuer to assess the price it has to pay PPC for the majority stake. It was not clear how the cash-strapped government would pay.

But Athens is still struggling to keep non-performing loans (NPLs) to small business & consumers out of the clutches of 'vulture funds' that buy loan books of distressed debt at a discount & try to recover the money.

Economy Minister George Stathakis said the agreement for NPLs would open up the market for loan transfers yet excludes mortgages for primary homes, consumer loans & those of small & medium enterprises for which there will be a regulatory framework by Feb. 15.

The latest reform bill is expected to be submitted to parliament on Saturday. The government aims to secure parliament's approval on Tuesday to obtain the 1 billion euro tranche by Dec. 18.

It will then have to pass other reforms, including a major restructuring of the ailing pension system, to conclude its first bailout review & open talks approximately debt relief.

(Editing by Ruth Pitchford)

Source: “Reuters”