Greece Gas Update: DEPA Privatization

General on DEPA Privatisation

The current legal ground for DEPA privatization was established in the law no 4643/2019 on Liberalisation of the energy market, modernization of the Public Power Corporation (PPC), privatization of the Public Natural Gas Company S.A. (DEPA), and support of RES, passed in December 2019 (OJ A’ 193/2019).

The law provides for the separation and partial demerger of DEPA in such a way that, at the end of the procedure, the assets and activities of DEPA are divided into the following three companies:

• DEPA Infrastructure S.A. undertakes a) all DEPA’s distribution gas activities, including DEPA participation in Attica Gas Distribution Company S.A. (EDA Attica), EDA Thessalonikis – Thessalias S.A. and Public Gas Distribution Network S.A. (DEDA S.A.) which develops and operates the gas network fin the rest of Greece, b) DEPA’s ownership on the gas distribution network, c) the fibre-optic network owned by DEPA and d) the rights and obligations of DEPA with respect to the development, design and implementation of projects for the infrastructure of distribution networks, including compressed natural gas projects or small scale LNG projects;
• DEPA Commercial undertakes all current wholesale and retail gas activities, including, participation in Attica Gas Supply company S.A. (EPA Attica), import of natural gas in Greece (either through pipelines or LNG), through its long-term contracts or other source; refueling of vehicles with CNG through proprietary or partner service stations, including all relevant contracts and the use of the trademark FISIKON; supply to end consumers and or remote natural gas distribution networks, the rights and obligations arising from the agreement with DEPA’s participation in the capital of Gastrade S.A (subject to the approval fo the Hellenic Competition Commission). and
• DEPA International Projects, which will undertake, through a spin-off all international projects in which DEPA participates (either directly or through its subsidiaries) such projects includes Interconnector Greece-Italy, EastMed Project, Interconnector pipeline Greece – Bulgaria (IGB) and the projects which will be developed in the context of director o indirect participation of DEPA in companies developing and constructing these infrastructure interconnection projects with neighboring countries.

The privatization tender is organised by the Hellenic Republic Fund S.A. (HRADF) who holds 65% shares in DEPA Commercial and in DEPA Infrastructure. 35% in both companies are held by the Hellenic Petroleum S.A. (HELPE). DEPA International Projects shall initially be 100% subsidiary of DEPA Commercial, but will before the submission of the binding offers for the privatization of DEPA Commercial be spin-off with the respective reduce of capital be transferred to DEPA shareholders. DEPA International Projects will not be privatized.

DEPA infrastructure Privatisation

On 9 December 2019, HRADF initiated the procedure for the sale of 100% shareholding in DEPA infrastructure. HRADF and HELPE, being the shareholders of DEPA Infrastructure, have entered into a MoU to jointly sell their respective stakes in the company, through an international tender process to be conducted by HRADF. The deadline for the submission of expressions of interest was 14 February 2020, but was, due to an increased interest, postponed for the 21 February 2020.

The main requirements for participation in the tender and passing of the pre-qualification phase, are: the financial requirement that the interested party has average shareholders’ equity for the last three financial years equal to €350 million or higher, and the technical requirement, that an interested part, or its technical affiliate supporter, demonstrate business activity in the oil or gas or electricity sector. In case of a consortium, the technical requirements must be met by at least one member of the consortium.

DEPA Commercial Privatisation

On 23 January 2020, HRADF, launched an international competitive bidding process, regarding the submission of an expression of interest for the acquisition of 65% of DEPA Commercial share capital. The deadline for the submission of the expression of interest is 06.03.2020.
HELPE, holding 35% of the shares, is interested in acquisition of 65% of HARF shares in DEPA Commercial. HELPE is enabled to participate in this privatisation procedure. In view of the safeguarding of the transparency of the tender process and the equal treatment of all participants, HRADF and HELPE have concluded a Memorandum of Understanding (MoU), setting out the terms of HELPE’s involvement in the tender process. Thus, in the event that HELPE either does not submit a binding offer or, despite the submission of an offer, is not selected as preferred bidder, an additional, independent process regarding the acquisition of the HELPE shares will be performed (the Bilateral Transaction). Specifically, the qualified participants will review and comment both the transaction SPA (regarding the HRADF shares) and the Call Option Agreement for acquisition of HELPE shares in the Bilateral Transaction. When submitting the binding offer they will not submit a separate financial offer for the acquisition of HELPE Shares, as this consideration shall be calculated on the basis of the consideration payable per share for the HRADF shares, discounted by a percentage in accordance with a formula to be set forth under the request for proposal. Subsequently, the preferred bidder (not being HELPE) shall grant to HELPE the Put Option (by signing a Put Option Agreement) while HELPE will grant to the preferred bidder the Call Option (by signing within a specified timeframe the Call Option Agreement), with the result that either of them purchase all 100% of the shares. The acquisition of the HRADF shares shall be a condition precedent for the Bilateral Transaction.

Parties intending to participate in the tender are requested to meet various legal, financial and technical requirements, the main requirements one being: the financial requirement that the interested party has average shareholders’ equity for the last three financial years equal to €200 million or higher, and the technical requirement, that an interested part, or its technical affiliate supporter, demonstrate business activity in the oil or gas or electricity sector. In case of a consortium, the technical requirements must be met by at least one member of the consortium.

Rokas (Athens)
Mira Todorovic Symeonides – Partner
Kosmas Karanikolas – Associate