Dimitris Sioufas Minister of Development

1. Athens hosted the signing that founded the Energy Community

What is the role of Greece in this emerging energy market?

The establishment of the Energy Community is an important event, not just for our country but also for the countries of South-eastern Europe and for the European Union.

It concerns the creation of a unified energy market in the broader area of the Balkans and as a next step, its incorporation into the EU's unified electricity and natural gas market.

Within these bounds, Greece played and continues to play a leading role, both in its contribution to the formulation of the Treaty, which was signed in Athens, last year on the 25 October 2005, and because it is the headquarters of the Energy Market Development Forum and the Regional Regulatory Board.

The creation of the Energy Community gives Greek enterprises the opportunity to become active in the construction of major energy infrastructure projects in the wider region, and the opportunity to cooperate with major European and US firms.

What are the priorities of this new Community in relation to the production and distribution of energy through this network?

The developments that took place in the 1990's in many countries of South-eastern Europe, resulted in the destruction of an already outdated and unproductive energy infrastructure.

The creation of suitable infrastructure for the production and transportation of electric energy in the wider region constitutes the first and foremost requirement for the development of the regional energy market and the successful implementation of the guidelines established by the Energy Community Treaty. I would like to note that a recent study of the European Bank for Reconstruction and Development (EBRD) and of the World Bank, estimated that more than €21 bln will be needed over the next 15 years for the restoration and construction of new power stations and electric energy transportation and distribution lines.

A team of donors has been set up headed by the European Commission with the participation of the World Bank, the EBRD, the USAID (USA), the CIDA (Canada), Italy, France, Germany, the Czech Republic and Greece. The purpose is to materialize the goals of the Treaty and support areas of the region in this difficult project. In fact, the World Bank has already begun by providing €1 bln in "fast-issuing" loans for carrying out investments in the area.

Having in mind these developments in the energy sector, what are the measures being taken to ensure a minimal impact on the environment?

With the signing of the Energy Community Treaty, the countries of South-eastern Europe, including those who are not members of the EU, accepted to adopt the principle of acquis communautaire in the energy sectors, the need for competition and also the protection of the environment.

Thus, we are creating a new and stable legal framework and from there not only will we upgrade the energy infrastructure but we will protect the environment and promote the sustainable development of the whole area.

With the arrival of large European energy companies to the newly founded energy market of the South-eastern European countries, what will the competitive force of the area be in the future? Which domestic companies are best placed to compete?

Nowadays, the development of the competitiveness and of the economy of any country depends upon attracting foreign investment from established markets and acquiring know-how, expertise and knowledge.

The development of the energy market in South-east Europe calls for the construction of new infrastructure networks on a large scale and activating new businesses along the entire production and supply chain. Analysts estimate that, in the coming years, investments in the energy sector in the region will amount to more than €20 bln.

Attracting foreign investors from the developed markets of Western Europe and the US will contribute significantly to the strengthening of competitiveness and to the development of the economy throughout the region. It also presents opportunities for local players as these foreign enterprises will need the cooperation of businesses and partners who know the conditions that predominate in the domestic markets.

2. Greece as an energy centre

Greece wishes to be the energy hub in the area. Various linkage projects are underway. When will they be completed and what will the advantages be for the country?

The promotion of large-scale linkage projects in the energy sector and the upgrading of the country's role on the worldwide energy map, constitute the basic elements of the government's energy policy.
Three important projects will position the country as an energy gateway between the East and the West: the Greek-Turkish natural gas pipeline, which is expected to begin operating in the beginning of 2007, the Greek-Italian underwater natural gas pipeline, which is expected to be completed in 2008, and the Burgas-Alexandroupolis pipeline, scheduled to be completed by 2009.

With the completion of construction of the Greek-Turkish and the Greek-Italian pipelines, significant amounts of natural gas will be transported from the rich in resources areas of the Caspian Sea and the Middle East, through Turkey, Greece and Italy and from there to the energy markets of Western Europe.

At the same time, the pipeline of Burgas-Alexandroupolis will relieve the pressure on the Bosphorus Straits allowing for large amounts of oil to be transported from the Black Sea to the markets of Western Europe, the USA, and Asia.

3. The domestic energy market of Greece

What is the regulatory framework for the natural gas and electricity markets?

Recently, the Parliament passed a new piece of legislation for the deregulation of the electricity and natural gas markets.

Thus, the European Directives 2003/54 and 2003/55 regarding the electricity and natural gas markets were incorporated into our national legislation.

According to this new law, the electricity market is set to be completely deregulated on the 1 July 2007 and the natural gas market will be gradually liberalized from November 2009.

In addition to this, in May of 2005, a new Grid and Power Exchange Code was put together creating the framework for managing the transmission system by the Hellenic Transmission Operator System and thus, clarifying the technical and commercial rules that govern the relationship between the Hellenic Transmission Operator System and the relevant licensees.

What steps are being taken to ensure the smooth and steady flow of energy?

The new legal framework for opening up the electricity and natural gas markets and the large-scale projects to link Greece with the energy systems of the neighbouring countries, and the continuous upgrading of the electric energy transmission system all contribute significantly to securing the country's energy supply.

The government has declared the years 2005-2010 "Energy Saving Years". In this context, initiatives have been undertaken to increase public awareness on the importance of saving energy. We start by introducing energy-saving technologies in public buildings.

How are you attracting investments in the Renewable Energy Sources sector?

Today in Greece, there are 700 MW generated by the Renewable Energy Sources system (RES), and the government aims to increase that to 1000 MW by 2008.

To achieve this goal, the Ministry of Development has put forward a new Bill for RES systems, by cutting red tape regarding licensing, installation and implementation procedures. Thus, we will be able to put national legislation in line with the EU Directive 2001/77. By the year 2010, 20.1% of Greece's energy production will come from clean energy. The creation of a new legal and regulatory framework in combination with new spatial planning for the installation of RES systems in areas with high energy potential is paving the way for large-scale investments.

It is said that Greece keeps a close watch on the efforts of major European energy groups and specialized firms, which enter the Greek market. Which energy groups are currently active in Greece and what are their business plans? How much capital is invested?

It is true that in recent years there has been great interest in large-scale investments in the energy sector. Foreign firms are already active in producing electricity from RES and most recently, there have been a series of acquisitions and mergers between Greek and foreign firms in the RES sector.

At the same time, in the coming days, the Hellenic Transmission Operator System will issue a tender for private investors to bid for licenses to produce electric energy using natural gas as a resource, for a total power of 900MW, as part of the policy to secure the country's electric energy supply until 2010.

The completion of this tender will signal the beginning of private investment in the field of electricity production. Large foreign firms, which are active in the field of energy, have already expressed their interest to participate in partnership with Greek businesses. By 2010, it is estimated that investments in the energy sector will exceed €3,5 bln.

4. The energy and natural resource markets are attracting businesses and new investments. Foreign capital plays a very important role.

Whom would you describe as the "model" investor?

Attracting investment means increased market competition, combating unemployment and fostering economic growth. In this perspective, I would say that the main characteristics of a serious investor would be the transferring of technological "know-how", creating new jobs, having a competitive edge, withstanding time and competition in a globalized environment.

What steps is Greece taking to attract foreign investors particularly in changing the legal framework and provide incentives?

The end of the Olympic Games initiated a full scale plan of reforms to attract investment and boost development in the country.
The following measures were taken:

• The new investment and development law that provides particularly attractive incentives for investment in all sectors of our economy.
• The new licensing system for processing companies that significantly cuts the red tape of starting a new business.
• The new tax system that reduces taxation on profits by 10%.
• The deregulation of the energy markets (electricity and natural gas) that aims at increasing large-scale investment in this sector.
• New commercial laws that aim to attract innovation in commerce.
• Privatization of certain companies of the public sector.
• The new licensing law concerning RES systems.
• The Competition Law.
• The new law for partnerships between the public and private sectors.
• New laws on public utility companies that aim to reform their management and operation.

5. The former Deputy Minister of Development Giorgos Salangoudis stated that "regional development is a national priority."

How will Greece look to profit from the regional development brought about by the Energy Community and how will the accession of Romania and Bulgaria to the European Union in 2007 will affect Greece's geopolitical position as an energy hub?

Regional development is a priority for the new government. The liberalization of the energy markets, the large international infrastructure projects for transporting natural gas and oil, the new framework for the development of RES and of course the dynamic created by the Energy Community, all point to this direction.

The entrance of Bulgaria and Romania into the EU will contribute to the further cooperation of Greece with these two countries both in the area of energy and other sectors of the economy, with significant benefits to all three countries, the wider region and the EU.

6. Competitiveness.

Greece is 47th in the global ranking for competitiveness in 2005, up from 51st in 2004, and 40th in the global ranking of entrepreneurship, up from 41st which it was in 2004. Research shows improvements in infrastructure, finance, the opening of markets and public sector management. How have you achieved these impressive results?

For the new government, the strengthening of Greek competitiveness is a basic priority. Our goal is to attract foreign direct investment, to create more and better employment, to promote entrepreneurship and the extraversion of Greek businesses. Put very simply, without competitive businesses, there cannot exist competitive economies.

We declared the years 2005 - 2010 (the year that the Lisbon Strategy ends) as the Years of Competitiveness for our country, to demonstrate the importance that we attribute to the strengthening of the competitiveness of the Greek economy and Greek businesses.

We keep a close watch on all competitiveness indexes of the international financial institutions and we are in close contact with their representatives in Greece, because we believe that their contribution is essential to imporove the image of our country as an investment destination.

Apart from the energy sector, how else is you Ministry looking to stimulate growth and create jobs?

A priority for the government and the main reason of all our initiatives is to secure dynamic and viable growth throughout the country, encourage profitable investment, and to facilitate the setting-up of new enterprises and profitable collaboration between the public and private sectors with full transparency. In short, we aim to cultivate an environment for success. We are putting forward measures and policies that will form the foundation of a new model for growth, boosting the competitiveness of the Greek economy and thereby unleashing the full creative and entrepreneurial potential of the Greek people.

The Greek government is implementing a wide array of reforms to deliberate the healthy and creative powers of the Greek economy and to attract foreign companies to invest in Greece.

Some of the important structural reforms are either underway or have already been completed:

• The acceleration of the privatisation process
• Reforming the banks' pension system
• Improving the public utility companies
• Simplifying the procedures for founding new companies
• Extending the opening hours of retail shops

On top of that, we have created a unified legal framework for Public-Private Partnerships (PPP). PPPs are a new tool which we expect to contribute efficiently in the implementation of better infrastructures and provision of better services to our the people.

Another significant initiative is the abolition or reduction of the fee that the Hellenic Industrial Property Organisation collects for services to Greek and foreign investors.

Also, in collaboration with the Ministry of National Education and Religious Affairs, we have set up a committee to prepare proposals for the revision of the existing legal research and technology framework in Greece.

We are working intensively to reverse the negative trends of the past and to ensure a better future for Greece. We are already seeing positive results:

• We witnessed a 13.1% rise in exports last year.
• The number of tourists rose by 8% and incomes by 10% in the tourist industry last year.
• We have seen a reduction in the unemployment rate from 10,4% to 9,8% and also in the long-term unemployment rate from 5,7% to 5,2% according to the latest Eurostat data.
• For the second consecutive year, the position of our country in the national ranking of the Corruption Perception Index has improved. From the 50th position in 2003 among 133 countries, in 2004 we climbed to the 49th among 146 countries and this year we improved our status even more by taking the 47th place among 159 countries. I must add that during the period of 2000-2003, our country had slipped 15 places.
• Our growth rate is double that of the Eurozone average.
• Finally, our country showed, during the 3rd quarter of 2005, the biggest improvement in competitiveness of any other country in the Eurozone. In terms of consumer prices, our country's competitiveness improved by 1,4%, while in terms of labor costs, it was improved by 0,9%. No other European country has showed such a spectacular improvement.

So, we continue to work in the same direction, always keeping in mind the three principles: quality-productivity-competitiveness.

Greece is a major investor in the Balkans. Who are the biggest investors in Greece? Which sectors of the economy would you highlight to potential investors reading this interview?

Energy, technology, agriculture, tourism and education are the main fields of interest for investors in Greece. As I already mentioned, we work intensively towards attracting foreign direct investment and to free up projects that have been blocked for years. This situation is now over.

According to the United Nations 2005 World Investment Report, in 2004 the inflow of Foreign Direct Investment (FDI) reached 1,351 billion dollars, while in 2004 FDI was $661 billion, and in 2002 only $ 50 billion. This means that in 2004, FDI has doubled when compared to 2003, while it rose 27 times compared to 2002.

Our aim is to make Greece competitive using its comparative advantages. Our aim is to make Greece a quality-oriented competitive country.

It is obvious that the new sources of development will come through the field of innovation and technology with a new knowledge-based economy. This is exactly why among other things we are seeking the creation and development of one or more business networks with an international range, in areas of high technology, where there already is a great business activity.

I would also add that Greece (a place of high quality traditional food) has a lot of potential in the production of labelled agricultural products and their distribution to the international markets. With a rigorous system of certification, quality in the product and packaging and aggressive marketing, Greece can claim its rightful place in the international market.

Of course, we cannot overlook tourism. Our strategic goal is for Greece to become the destination of choice for a range of different tourists by offering a diverse and differentiated tourist product. We must also exploit our competitive advantage, the major industry of the Greek economy, the merchant marine.

Another goal is to boost the position of Greece in the field of education, through the development of selected, high-quality postgraduate programs and the foundation of the International University in Thessalonica. We want to earn an international acknowledgement in the academic field and reverse the trend that sees many highly capable Greek students stay abroad after their studies. We want Greece to be a country that attracts foreign students and an educational centre for South-eastern Europe, the Mediterranean, Africa and Asia. With the constitutional amendment that we are seeking, Greece will open the road for the establishment of non-government non-profit universities as well as branches of acknowledged universities from abroad.

For all the above we have specific ideas and accomplishable plans. We will turn from products and services of low cost, to added value products and services. We will defend Greek enterprises, both here and abroad. Here in Greece, we will defend the rights of employees and consumers and do our best to develop a vibrant, free market economy which is controlled by rules and conditions.

Our goal is to create a new business-friendly environment in Greece where new and old entrepreneurs are and feel welcome.