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Greece Infrastructure Report Q4 2009Published by: Business Monitor International Published: Oct. 14, 2009 - 67 Pages Table of Contents
AbstractThe announcement of elections in early October has stopped developments, including those in theinfrastructure sector, dead in their tracks. Early elections create uncertainty regarding several tendersannounced over third quarter, including those for Athens’ new motorways, the new international airportin Crete, the partial privatisation of EYATH, and the much anticipated partial privatisation of DEPA, allof which were expected to be awarded, or be in their final stages, by the end of the year. Polls indicatethat the opposition party PASOK is heading for electoral victory. According to their policy agenda theyoppose the privatisation of state owned utilities and have strongly opposed the partial privitisation ofEYATH. Political risk therefore becomes a key concern for the Greek infrastructure sector.The burdensome bureaucratic edifice of Greece is costly to investors and is a major obstacle to doingbusiness in the country. This is reflected in BMI’s Infrastructure Business Environment Ratings andProject Finance Ratings for Western Europe. The infrastructure sector is dominated by the three bigplayers operating in the Greek market: Terna, Aktor and J&P Avax. With the contraction in theconstruction sector in Greece, Greek newspaper Naftemboriki noted in a recent report that the gapbetween them and smaller construction players has increased, therefore allowing Terna, Aktor and J&P tofurther consolidate their position in the market, especially the PPP market, which they dominate. Thisposes a strong downside risk for Greece’s Business Environment Ratings, as it can affect the indicatorthat measures competitiveness in the construction and infrastructure market. In BMI’s Q409 Greece Infrastructure Report, we maintain the same forecasts as last quarter. Though thenew tenders, especially for motorways, suggested strong upside potential in early September, theuncertainty regarding future policy caused by the pending elections prompted a ‘wait-and-see’ attitude onour part. We forecast that construction sector real growth will continue along the downward trend itembarked on in 2008 as revised data from the national statistics agency revealed. First-quarter data camein negative, broadly in line with our expectations, through the fall was not as abrupt as we had expected. Accordingly, gross fixed capital formation for non-residential construction (including infrastructure)declined by 0.7% compared with Q408, while seasonally adjusted construction industry value registeredreal growth of -4.5% compared with Q408, but positive 1.4% compared with the corresponding quarter ofthe previous year. The latter figure is a very positive sign for our forecasts for 2009, which show that weexpect to see a contraction, albeit one that is less steep than last year. Indeed, the first forecasts for theyear seem to validate this view, with the year-on-year growth figure in positive territory. Major players in the Greek infrastructure industry include locals Elliniki Technodomiki-Aktor-TEBGroup, J&P-AVAX, Terna, Mytilineos, and Aegek, some of which also have significant operationsabroad, mainly in the Balkans and Middle East. We anticipate that expansion abroad will become an evengreater of part of the corporate strategy of these firms in the coming years, as it will help offset thedownturn in Greece. However, it should be noted that, with the possible exception of Saudi Arabia andQatar, the Middle East and the entire Balkan region do not look too promising for 2009-2010 either. It isworth noting that at least for 2008, their strategy of internationalisation paid dividends, as the threecompanies reviewed in this report (Terna, J&P-Avax and Aktor) showed robust revenue growth for 2008,beating the downward trend set by many of their European rivals. Contracts overseas also cushioned thecontraction in domestic contracts, which in turn affected order books in the first half of 2009. Get Full Details About This Report >> |
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