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Memorandum of Understanding on Specific Economic Policy ConditionalityPrior to the disbursement:152a. In line with the Ports Policy Paper, HRADF launches the Expression of Interest forselling majority shares in the master-concessionaires for Thessaloniki port.b. The HRADF appoints at least one member to the Board of the companies under itsportfolio where it is not represented.c. The Authorities transfer 17% of the shares of PPC held by the government to HRADFto start preparing the privatisation of the company.d. The Government implements a list of pending actions required for privatization of keyentities (All Government actions pending are listed in Annex 11.1).e. PPC launches the expression of interest for selling ADMIE.f. The Authorities submit to Parliament legislation for the privatisation of Small PPC.g. Amend the law to improve governance of HRADF and allow HRDAF to controldirectly companies in its portfolio. The Authorities will adopt, in consultation with theEC/ECB/IMF, legislation:i. To allow the CEO to act as chairman and reduce the number of Board membersrequired to be present to hold a board meeting from 5 to 4, to ensure uninterruptedoperations in the event that the chair is vacant; provide personal contracts to theexecutive members of the BoD and narrow the grounds for dismissal of the board;introduce greater flexibility in tools and procedures for asset sales; amend therequirements of prior valuation of assets, by providing alternative mechanisms thatinclude a fairness opinion, while preserving strong ex-post safeguards ; legislatethat super/extraordinary dividends (i.e., in excess of profits of the previous year) orreductions in share capital from entities under privatization are paid to the HRADF(and within 10 days to the segregated account); and exempt the HRADF from therequirements under L. 4111/2013 regarding the submission and monitoring ofmonthly/quarterly targets and ensure that reporting requirements of the HRADFunder art. 78 of L.2362/1995 are limited to: i. Annual budget (expenditure andrevenue) and any changes to it made during the year (forward-looking), ii Monthlysubmission of budget execution and financing (backward looking), iii. Monthlysubmission of wage bill data (backward looking) and iv. Monthly submission ofcommitment registry summary (backward looking on a monthly basis, forwardlooking for annual budget spending). The HRADF will review by June 2014 currentlegislation that applies to GG entities, including the organic budget law(L.2362/1995; to identify any legal provisions that hamper its ability to operateefficiently or contradict aspects of its law, and the Authorities, in consultation withthe EC-ECB-IMF, will take action to address these by October 2014 (with theamendment of the organic budget law).ii.Requiring the HRADF to exercise its shareholders’ powers in the companies inwhich the HRADF is a majority shareholding, according to a framework ofcooperation which sets out objectives and criteria in line with the privatizationprocess. Under such legislation, the HRADF shall ensure ongoing adherence ofsuch framework of cooperation, including through taking appropriate actiontowards Board members and management in the relevant companies.h. Measures to strengthen the regulator for water. The Authorities strengthen theindependence and operational capacity of the Special Secretariat of Water by revisinglegislation enabling the Special Secretary to issue formal decisions on all regulatorymatters, by providing him with a fixed–term contract that will ensure continuity andindependence; and by completing the transfer of seven employees.
Memorandum of Understanding on Specific Economic Policy Conditionality2.1.1. PPC restructuring and privatisationFollowing the plan adopted by the Government in its cabinet meeting of 24 July 2013, and publishedin the Official Gazette (FEK 168 Α/24.7.2013), the Authorities take the following actions:1. Adopt legislation for the privatisation of Small PPC by June 2014.2. Ownership by the State or by any other entity controlled by the State of any quota ofADMIE shares will be subject to the following conditions (continuous):i. The execution of the plan will be made in strict adherence to the announced timetable,and in consultation with the European Commission services so as to ensureconsistency with the relevant EU legislation and best practice and with the currentfiscal programme and financing targetsii.iii.iv.The voting rights conferred by ownership of ADMIE shares will be exercisedseparately (i.e. by separate state entities) from those of the PPC or another energycompany;The privatisation strategy and targets of the Government are fully respected;The process of acquiring the shares will have no tax or financial consequences for theGovernment that are incompatible with the objectives of the Adjustment Programmefor Greece.3. The privatisation process of PPC, in all its phases, is undertaken in full collaboration amongPPC, the Ministry of Energy and Environment, the energy regulatory authority (RAE), andHRADF. A regular schedule of meetings is set, to which the EC and the Eurogroupparticipate through observers (continuous).2.1.2. Provisions regarding the privatisation of PPC and DESFA1. The Government undertakes that whichever the outcome of the privatisation process the gasindustry and electricity industry structure will be fully compliant with Directives2009/73/EC and 2009/72/EC on the internal energy markets (continuous).2.1.3. Reforms of the Governance of PrivatisationThe Government will take actions that will provide the HRADF with all necessary authority toeffectively control companies that it is responsible for privatizing, to improve the effectiveness of thelaw governing the HRADF and reduce legal uncertainties, while ensuring high standards oftransparency and accountability.1. To strengthen the governance regime of privatisations the HRADF will complete anassessment of the management and board members of companies in its portfolio and take allappropriate steps (including by terminating the relevant appointment) with respect to thosethat are not performing well or whose actions are not aligned with the HRADF’s goal ofprivatization. The assessment will be completed by the Board of Directors of the HRADFbased on a set of clear objectives and criteria by (June 2014).2. Frameworks of cooperation with the companies in which the HRADF is a majorityshareholding shall be designed and adopted by the HRADF Board of Directors (June 2014)3. To facilitate close cooperation between government ministries and the HRADF, an interministerialworking group led by the Secretary General responsible for Public Assets withthe participation of the Prime Minister’s office, and the HRADF, will be instituted whichwill meet on a biweekly basis to review pending government actions and ensure theirexpeditious completion. A report from these meetings will be circulated to the workinggroup after each meeting, showing pending issues, and progress achieved. The Authoritieswill review the list of such actions with the EC, ECB, and IMF on a monthly basis to jointlyassess progress (continuous).153
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OUTLINE OF THE REPORTEXECUTIVE SUMM
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LIST OF GRAPHSGraph 1. Economic cli
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ACKNOWLEDGEMENTSThe report was prep
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European CommissionThe Economic Adj
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1. INTRODUCTION1. INTRODUCTION1. Th
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2. MACROECONOMIC AND FINANCIAL DEVE
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2. Macroeconomic and financial deve
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Chart 18Graph 13.1. Distance to Fro
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4. Debt sustainability analysis and
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OCCASIONAL PAPERSOccasional Papers
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No. 46No. 47No. 48No. 49The Western
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No. 80 2011 Pre-accession Economic
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No. 119No. 120No. 121No. 122Possibl
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No. 1582013 Economic and Fiscal Pro
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