Euro zone officials are considering a big overhaul of Greece’s sputtering privatisation programme that would move most of the state-owned real estate intended for sale into a Luxembourg-based holding company managed by foreign experts.

The plan – contained in a report submitted by the European Stability Mechanism (ESM), the euro zone’s €500 billion rescue fund, to Greece’s bailout lenders – is aimed at cutting through the bureaucracy that has hampered Athens’ privatisation agency, the Hellenic Republic Assets Development Fund, which has struggled to meet its targets.

It could be politically explosive in both Greece and in the euro zone's northern creditor countries, which have vowed to provide Athens with debt relief sometime in the next 12 months.

Under the plan, the new holding company would be empowered to manage the real-estate portfolio independently from Greek government interference, including raising cash against the portfolio’s value to either pay down government debt or improve some of the lots, many of which are now unattractive to private buyers.

It would be up to Athens to ultimately decide when to sell.

The ESM was commissioned to submit the report by euro zone finance ministries earlier this year as the “troika” of bailout lenders were forced again to cut the privatisations’ projected revenues.

When Greece was given a second bailout 18 months ago, troika officials estimated privatisations would raise €9.2 billion by the end of this year and €19 billion by 2015. Under a July review, those projections were slashed: only €3.2 billion is expected this year and €8.7 billion by 2015.
– (Copyright The Financial Times Limited 2013)