After Piraeus Port, Chinese COSCO eyes trains to build Europe hub

ATHENS / SHANGHAI - Reuters

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China’s COSCO is expected to make an offer for Greece’s rail network after becoming the sole bidder for the country’s largest port, two people familiar with the matter said, as the state owned shipping giant forges ahead with a plan to build a European transshipment hub.

Buying TRAINOSE and Piraeus Port would give COSCO maritime connections to the Suez Canal and rail links to the Balkans and central and Eastern Europe.

Bolstered by December’s merger with China Shipping Group , COSCO’s focus on Greece is about building market share at a time of anguish in a bruised and oversupplied shipping sector, industry sources said.

It also fits with China’s “One Belt, One Road” policy of building a modern Silk Road to boost trade and create an outlet for Chinese industrial powerhouses caught up in the global downturn and slower growth at home.

COSCO was unchallenged in its $400 million offer for a 67 percent stake in Piraeus Port last month and is set to be named the preferred investor.

But it could face competition for the rail network, including from U.S. railroad holding company Watco, one of the individuals said, after Greece relaunched the tender in an effort to drum up more interest. TRAINOSE has an estimated value of dozens of millions of euros.

“COSCO and Watco are interested in TRAINOSE,” said the source, who declined to be identified. “There is also a Greek group which is interested and is looking for a partner.”

A COSCO spokeswoman declined to comment on prospective bids for other Greek assets. She said the firm believed buying Piraeus would improve the port’s competitiveness and efficiency, but declined to elaborate on detailed plans.

Watco could not be reached for comment and the source did not identify the Greek group.

Officials in Greece have said it is too early to comment on specifics, but a sale is almost inevitable: A separate source close to the matter said that without a sale TRAINOSE could be forced to return millions of euros in state subsidies to the European Union.

The leftist government of Prime Minister Alexis Tsipras opposes privatizations and halted the sale of the port and other state assets after winning elections in January last year. The process resumed under a third international bailout of up to 86 billion euros ($94 billion) that was agreed in August.

Piraeus Port, near Athens, has flourished under the management of Cosco Pacific, a listed COSCO unit that took over under a 30-year concession in 2009.

“I think any port or related investments around the Mediterranean - not just in Greece but also in Turkey, North Africa and the Black Sea - will be of interest,” said Jonathan Beard, vice president at transport consultancy ICF International in Hong Kong.