Greece opposes Canadian gold mine

Athens - Greece's new left-wing government will cancel plans to sell the state natural gas utility and is firmly opposed to a Canadian-run gold mine that is among the biggest foreign investment projects in the country, the energy minister told Reuters.

The comments on Friday by Panagiotis Lafazanis, who represents the more radical wing of the ruling Syriza party, further reinforces early signs that the government is sticking to campaign pledges that have chilled investment and unnerved financial markets.

The Skouries gold mine operated by Vancouver-based Eldorado Gold. in northern Greece was the flagship project of the last government's foreign investment drive and considered a test case that would reveal whether Greece could protect foreign investors despite local opposition.

"We are absolutely against it and we will examine our next moves on it," Lafazanis, a 63-year-old former Communist, told Reuters at his new ministerial office. He declined to say if the government would try to block the project from going ahead.

Shares of Eldorado Gold tumbled to a six-year low on Friday and were trading down 18.5% on Friday on the Toronto Stock Exchange. The company owns 95% of the Greek venture.

"We have our permits, so we're legally entitled to continue our operations and development projects there. So for us, it's business as usual at this point," said Krista Muhr, vice president of Eldorado's investor relations, in response to the report.

"I don't think we would continue investing money into Greece if we weren't confident," she added.

The firm said last week that it would spend about $200m this year to develop Skouries mine, and expected to complete construction in late 2016.

The project is among the biggest foreign investments in Greece since the country sank into a debt crisis in 2010, with Eldorado taking over the mine in 2012 and promising to invest $1bn over five years.

But it has been beset by controversy and violent local protests for years and Syriza had criticised the environment impact of the project on the pristine Halkidiki peninsula landscape of beaches and forest surrounding it.

The new minister was even more categorical on gas utility Depa, saying the planned sale of a 65% stake would be scrapped.

The previous government had planned to accelerate the privatisation as part of commitments under Greece's €240bn bailout from international lenders, after an initial attempt to sell to Russia's Gazprom in 2013 failed.

"In no way will we privatise gas utility Depa and sell it to anyone, no matter who the interested party is," Lafazanis said.

The latest comments add to plans already outlined by the new government to freeze sales of stakes held by the state in the country's biggest port Piraeus Port, its main power utility Public Power Corporation (PPC), oil refiner Hellenic Petroleum and power grid operator Admie.

Power

Greece has raised €3.1bn from privatisations since it was first bailed out five years ago by the EU and International Monetary Fund, far short of an original target of about €22bn by 2013.

Lafazanis also said his government would move fast to revoke a law that allowed the state to spin off power utility PPC and which opened the way for the sale of 30% of its production capacity to investors.

Under the previous government, Greece - which holds a 51% stake in PPC - had also planned to sell a further 17% stake in PPC in 2016.

"Once parliament resumes, we will table the relevant bill and the spin-off will be cancelled. We will not proceed with any further privatisation," he said.

Greek businesses and households have been hit by four years of austerity and Lafazanis said the new government would seek to relieve them by cutting their electricity bills.

"Our concern is how PPC can operate more effectively so that power prices paid by businesses and households are reduced," he said.

But Lafazanis struck a more moderate tone on the €400m sale of Greek natural gas grid operator Desfa to Azerbaijan's state oil firm SOCAR, a deal agreed in 2013.

He said the government would act on the project only after the European Commission, which is investigating whether the deal violated competition rule, makes it decision later this year.

"We will wait for the EU Competition Commission's decision and then we will decide our own moves," he said.