The European Commission has concluded certain fiscal benefits granted by Greece to port operator Piraeus Container Terminal (PCT) and its parent Cosco Pacific provided an “undue financial advantage over their competitors” and the aid must be repaid.
The EC concluded the benefits were in breach of European Union state aid rules. The benefits include tax exemptions and preferential accounting treatment. The amount involved has not been disclosed by it is reportedly below seven figures.
The EC also said that "to avoid further distortions of competition, the Greek authorities are expected to cease granting these advantages to PCT".
Cosco operates container terminals II and III in Piraeus under a 35-year concession agreement and the volume of business through the terminals since 2010 has risen dramatically, turning Piraeus into a major European entry point for Chinese trade.
This activity is of course of benefit to both Cosco and the Piraeus Port Authority which collects a concession fee.
In its latest annual report, Cosco reports that though the terminal profit overall was down in 2014, revenue grew 10% to $870m, with the Chinese giant reporting this was mainly through the operations of the terminals in Piraeus, Guangzhou and Xiamen. Cosco said business of the Piraeus terminals "thrived" and its profit rose 25.7% to nearly $29m.
Cosco is also a front-runner in the bidding for a 67% stake in Greece’s biggest port under the government's EU-backed privatisation programme. However, this programme has, for the time being, stalled as the new Syriza-led government re-examines sell-off plans launched by the previous government.
Late February, Greece’s Finance minister Yanis Varoufakis said the government is preparing the "appropriate institutional framework" to move ahead cooperation with Cosco. Varoufakis said this when visiting the PCT installations, declaring Athens’ desire for further strengthening of commercial relations with Beijing.
Accompanied by Chinese Ambassador to Athens Zou Xiaoli, Varoufakis assures Zou and Cosco officials the government wants cooperation between the two sides to expand, but gave no indication of the model to be chosen to utilise the services of the port as part of the government's revised privatisation programme.
“We wish to proceed rapidly to the creation of the conditions that are necessary for the cooperation between the Greek state and Cosco and in the next few weeks we will have created the appropriate institutional framework to move ahead,” said Varoufakis more than a month ago.