Will Russia pave itself a railway to Greece?

RIA Novosti / Valeriy Melnikov
Russia in among three European railway companies reportedly bidding for all or part of Greece's railway business, as the debt-stricken country sells assets to satisfy its lenders.

Russia's railway monopoly Russian Railways is in talks over buying all or part of the network.

Its head Vladimir Yakunin told Reuters, "We're keeping in contact with the Greeks … They haven't decided on the model yet, so it's too early to talk about our participation."

Russia is targeting the entire Greek railway network and its operator Trainose, while Romania's largest private railway company, Grup Feroviar Roman (GFR), is interested in the cargo business, according to Reuters. 

With Russian investments in Greek railways estimated at up to $3 bln annually, Greece would become part of the Eurasian transportation network.

Russia has long been rumored to be seeking Greek partnerships, indicating its interest to invest in the Greek railways last year. Last autumn Mikhail Dmitriev, President of the Center for Strategic Research, said that it was Russia who was able to drag Greece out of crisis, while Greece might turn up as a vital junction of the east-west and north-south connections along the Eurasian land bridge.

However, last year, despite the Russians seeking to invest in Greece, the Greek government had reportedly rejected it. There was more speculation on Greece getting the French to run the railways in order to simply service the foreign debts.

French railway company SNCF wants passenger and freight routes and has gone through a due diligence process, said one Greek official interviewed by Reuters. Talks were held in Athens and Paris in 2010 and late 2011, when they reached the level of the Transport Ministry. However, a SNCF spokesman in Paris said the French rail operator "is not in the running for the purchase of Trainose, nor is it in the running for the purchase of a railway company or a railway line in Greece".

Trainose, which officials hope will raise 200 million euros, and the Railway Organization of Greece (OSE), which owns the physical railway infrastructure, were one company before being split in 2008. Greece took over 10.7 billion euros of their debts in late 2010, about 700 million euros of it from Trainose.

The success of a deal with the European railway companies hinges largely on the Greek state's ability to receive European Union approval for the state intervention. Athens is pushing for the green light prior to going ahead with the privatization.

Trainose is among dozens of state-owned businesses put on the auction block under Greece's 130 billion euro bailout program with the so-called troika of the European Commission, European Central Bank and International Monetary Fund.

Under an EU timetable, the tender process for Trainose will open in the fourth quarter of 2012, and its assets will be transferred to the Greek privatization fund. The proceeds from a sale, slated to close in the spring of 2013, will contribute to the 19 billion euro target Greece aims to raise to cut debt.