Historical background
The Piraeus Port Authority (OLP1) has the management and exploitation of the Piraeus Port, the largest port in Greece and one of the largest ports in Europe. OLP is a société anonyme with the majority of its share capital (currently 74.5 per cent) being owned by the Greek State and is listed on the Athens Exchange since 2003.

OLP was initially established as a public law legal entity (laws 4748/1930 and 1559/1950) and was provided with certain benefits and rights.

Pursuant to law 2688/1999 OLP was transformed to a société anonyme acting for the public interest1.

OLP is entitled to receive funding for servicing public purpose needs from national and European funds (law 3816/2010) in accordance with the relevant decision of the Ministers of Finance and Shipping.
The Concession Agreement with the Greek State

In 2002, the Greek State and OLP entered into a concession agreement whereby the Greek State conceded to OLP the exclusive right to use and develop the grounds, buildings and facilities of the Piraeus Port (Concession Agreement). The Concession Agreement was ratified by law 3650/2008.

The agreed duration of the Agreement is 50 years (i.e. expiring on February 13, 2052), but may be extended once or several times pursuant to a relevant amendment.

Under the Concession Agreement the ownership of any new structures, buildings or improvements constructed by OLP during the term of the Agreement will automatically vest with the Greek State. OLP is entitled to compensation on the basis of the residual value of such constructions to the extent that their financing was provided by OLP.

OLP has to pay a fee to the Greek State for the use and management of the Piraeus Port. Pursuant to the Agreement the fee for the first three years of the concession amounts to one per cent on the annual consolidated revenues of OLP, whereas after the third year (i.e. at present) it increases to two per cent. The fee is further increased if OLP uses existing or developed buildings and spaces for purposes other than the provision of port services (i.e. management of buildings for tourist, industrial or cultural purposes or for trading activities) as well as in case of renegotiation of the Concession Agreement.

Renegotiation can be initiated by either party in case the circumstances under which the Concession Agreement has been concluded change unpredictably including cases of force majeure, new European or international legislation that the Greek State is obliged to comply with, significant technological development or other changes which could not be predicted and affect the operation of OLP as well as in case the Greek State participation in the OLP share capital falls below 51 per cent.

The Concession Agreement can be terminated only by the Greek State for the following reasons:

•    For any serious breach of the Concession Agreement by OLP
•    OLP is declared bankrupt, is liquidated or it is placed under special administration
•    OLP does not pay the fee mentioned above to the Greek State
•    OLP’s management jeopardizes the national security and the Greek public order
•    OLP does not comply with the national port policies, the law on the protection of the environment and the regulations in respect of the navigation safety and the protection of health and security of the employees
•    OLP does not support the national and local economy and the development of the local and international trade

In case of termination of the Concession Agreement, OLP must return the management and the use of the Piraeus Port to the Greek State and the Greek State substitutes OLP in its rights and obligations towards third parties in the framework of works which are under development.
Concessions to third parties - the agreement with Cosco

Pursuant to the Concession Agreement, OLP is also given the right to concede to third parties the use of parts of the Piraeus Port and to expand existing activities. Any such further concessions by OLP to third parties may not exceed the duration of the Concession Agreement. Such concessions must not affect OLP’s obligation in respect of the port services that OLP has to offer.

In 2009 OLP entered into an agreement with the Special Purpose Company ‘Piraeus Container Terminal S.A.’ (SPC) and its sole shareholder ‘Cosco Pacific Limited’ through which it agreed the concession to SPC of the port installations of Piers II and III3 and the surrounding area of the Container Terminal Facility4 and specifically, SPC was granted the exclusive right to use and commercially exploit the above land area and the right to use, together with OLP, the adjacent berthing manoeuvre sea area. Moreover, the parties agreed the execution by SPC of works to upgrade Pier II and for the construction of Pier III through self-financing. The duration of the concession agreement is 30 years and shall be mandatorily extended to 35 years, should the construction works on Pier III be completed within the agreed timetable. OLP reserves the right to renew unilaterally and at its own discretion the agreement for another five years. The concession is agreed against annual variable consideration and annual guaranteed consideration. This is the most important of the concession agreements that OLP has entered into.

In 2013 OLP and SPC entered into a memorandum amending the concession agreement. The memorandum provides for the suspension of the annual guaranteed consideration payable by SPC to OLP, in exchange for an infrastructure investment by SPC in Pier III to the amount of €230 million. The memorandum has been submitted to the European Commission for approval. The said approval by the European Commission is still pending.
The privatization of OLP

In 2012 the obligatory possession of 51 per cent of the OLP share capital by the Greek State, which was provided by the legislation previously in force, was abolished through the legislative act dated 7.9.2012 and law 4092/2012. The green light for the privatization of OLP was thus given. In the same direction, certain benefits, rights and tax exemptions which were granted to OLP and were inherent in its public character, were abolished by law 4152/2013.

OLP, together with other Greek ports, has been included in the portfolio of the Hellenic Republic Asset Development Fund (HRADF) for privatization. Specifically HRADF intends to sell 67 per cent of the share capital of OLP.

According to the latest press releases the approval by the European Commission of the memorandum between OLP and SPC (mentioned above) has delayed the privatization process. What is currently being examined is the inclusion of the memorandum in the HRADF invitation to tender pending its approval by the European Commission.
Source: Norton Rose Fulbright