November 11, 2019 / 12:42 PM / a month ago

China, Greece agree to push ahead with COSCO's Piraeus Port investment

ATHENS (Reuters) - China and Greece agreed on Monday to push ahead with a 600 million euros investment by COSCO Shipping into Greece’s largest port, Piraeus, as part of efforts to boost its role as a hub in rapidly growing trade between Asia and Europe.

Chinese President Xi Jinping and Greek Prime Minister Kyriakos Mitsotakis visit the container terminal of China Ocean Shipping Company (COSCO), in Piraeus, Greece November 11, 2019. Orestis Panagiotou/Pool via REUTERS

The agreement, part of 16 trade deals signed between Greece and China, came during an official visit by Chinese President Xi Jinping to Athens on Monday.

The two countries have drawn closer since 2009 when COSCO won a 35-year concession to upgrade and run container cargo piers in Piraeus (OLPr.AT). COSCO Shipping [601919.SS] bought a majority 51% stake in Piraeus port in 2016.

COSCO plans to turn Piraeus port into the biggest commercial harbor in Europe, spending about 600 million euros ($660 million) to boost operations, including mandatory investments of 300 million euros by 2022 which once concluded will allow it to acquire an additional 16% stake in the port.

But opposition from local communities prompted Greece to reject COSCO’s proposals for a new container terminal in Piraeus last month, saying that conditions “were not ripe” yet.

Xi met Greek Prime Minister Kyriakos Mitsotakis on Monday and the two countries signed a memorandum of understanding, stating their mutual will to overcome any obstacles in the implementation of COSCO’s investment in Piraeus, a Greek government official said.

Both sides sought to play up Greece’s strategic location at the crossroads of Europe, Asia and Africa, saying it could become a hub for channeling goods from the world’s second-largest economy and top exporter into Europe.

“We want to strengthen Piraeus’ transhipment role and further boost the throughput capacity of China’s fast sea-land link with Europe,” Xi said after meeting Mitsotakis.

Xi was set to visit COSCO’s facilities in Piraeus, Europe’s sixth biggest container port, later on Monday.

During a visit to Shanghai last week, Mitsotakis said he wanted Piraeus to become Europe’s No.1 port and that COSCO’s spending there could reach 1 billion euros.

The European Investment Bank (EIB) on Monday agreed to extend a 140 million euro ($154 million) loan to help COSCO with its investment plan in Piraeus.

Xi said that China also wanted to expand its investments in the energy, transportation and banking sectors.

China’s State Grid holds a minority stake in Greece’s power grid operator ADMIE. On Monday, State Grid expressed interest in taking part in ADMIE’s one billion euro scheme to build an undersea power cable to link the island of Crete to the mainland by 2023.

In the banking sector, Greece’s central bank Chief Yannis Stournaras met with executives of China’s Industrial and Commercial Bank. The Bank of Greece has told the bank that it can set up a representative office in Greece.

Another Chinese bank, Bank of China Europe, set up a branch in Athens this month.

Reporting by George Georgiopoulos, Angeliki Koutantou and Renee Maltezou

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