Special feature: Greece

Interview with Mr Christos Dionelis, Managing Director of ERGOSE

March, 2018

Investment is the key aspect that keeps coming up with all our interviews. This will be the critical pillar that will catapult the Greek economy towards sustainable growth. For FDI to come into Greece, the perception must change. In your dealing with foreign investors, how would you gage their perception and have you noticed a change over the past year?

Mr Christos Dionelis: The role of the Ergose is to not find investors, now. If we do move our business overseas, more, we might start to look for investors. For the time being though, Ergose, is to focus on construction and ensure that the railway network in Greece is managed properly. Everything starts with the Ministry, they decide on investments on railway networks. All the investments have a very clear and concrete framework, which aligns with the EU. We are waiting for a clear mandate to realise the trans-European railways in Greece. This is state policy that governs our decisions. Then, the capital goes to Ergose to start with railway construction. We have supervision from the EU and Greek government. We manage our business by making a series of different business, such as design, impact- and feasibility studies, land acquisition and construction. About investors, if Europeans or Chinese want to invest, we are constantly looking for partners. This is a new concept for us, we only started in 2015 with this. The statutes of our company were changed to allow for foreign partnerships. Over the last year we started projects, such as the one in Montenegro. We also participate in projects for R&D.

Our role is to not attract investors, but to play the role of technical consultant. Our knowledge and expertise is very good. Our structures are quite unique for Europe and so we have unique knowledge. People are interested to see what we know and they come here to talk to us about our capabilities and they want to team up for projects abroad. Yes, we can handle difficult projects because we are used to working with very technical circumstances, seeing as Greece is prone to earthquakes. We build interesting things, like this bridge, which sits on top of a cluster of earthquake falls. It has one of the largest spans, it is 140m, and is equipped with very specialist equipment, such as seismic structures. It was probably the most difficult project that we designed. Railway bridges are very heavy structures and it is very difficult to successfully construct these. We have 20 bridges that are similar to this one.

It is very important to highlight your expertise, specifically as it applies to natural disasters. If we can speak of specific projects, among these there is the Egnasia-railway project, which is €10 billion. What can you tell us about the scope of this project and the economic impact thereof?

Mr Christos Dionelis: Our final task is to construct the trans-European railway network in Greece. It will go throughout Greece, it is the East-Med corridor. This will go from Sophia, through Thessaloniki, to Athens. According to EU legislation, we have the obligation to finish the core network by 2030. All the EU countries have this same obligation. We are working in-line with the EU prerogative. This specific project, Rail Egnatia, covers Northern Greece. It branches to Thessaloniki, to Albania and to Egnatia. This is the current plan. We are currently focusing on Armanio, Alexandropoulos and Thessaloniki. This project isn’t only of Greek interest, but also for the neighbouring countries. This is why the Ministry signed this in the presence of the neighbouring presidents. This will connect all the important ports in the Black Sea with the ports in Northern Greece. I can assure you that if the line from Alexandropoulos is constructed and it can start transporting containers, it will very quickly reach its full capacity. There is a great need for these lines. Currently, the only line into the Black Sea is through the Straights. This is very costly and time consuming. Expanding the Alexandropoulos line will be a very fruitful alternative. It will attract many private investors.

We have seen the success of the joint-venture between the Baltic countries. They are constructing the Rail Baltica network. We are looking at their approach and so we are creating this line that will connect Greece and Bulgaria. This is currently under investigation; we have a common task-force investigating how we can establish this Greek-Bulgarian venture. There is a lot of traffic in this Black Sea area – we truly believe it will prove to be very fruitful for any investor, the demand is there.

It is easier to service countries in Central Europe from Greece than from ports such as Rotterdam or Hamburg. Instead of ships having to go all the way around Western Europe, this would save quite a bit of time and money, correct?

Mr Christos Dionelis: Yes, you would save 8 days. This is very exciting, but we are taking all of this step-by-step. We are currently just in the investigation phase.

One of the other exciting aspects, is the importance of connecting Greece with a robust network of intermodal transport – an efficient railway system plays a huge part of this. To make this beneficial, you need the creation of these logistics hubs. Can you share with us more about the rail-connectivity to these logistics hubs?

Mr Christos Dionelis: Thriasso-Pedio is very impressive. It is a very big project that has recently been finished. It is a huge railway freight village. It connects Iconio in the Port of Piraeus, within the private section that belongs to COSCO. The idea is to take all the containers from Piraeus to move it to Central and Northern Europe. Currently, most of the movement of containers are with trucks – this isn’t as beneficial as railways. Railway systems are cheaper, more environmentally-friendly, more energy efficient, all-in-all it is better than truck transport. This project is almost ready to start. We built it and we are still acting as consultants in order to yield clear guidelines on how this complex must be operated. A recent decision by the EU speaks about the necessity of investing heavily into railways.

The EU itself invested €300 million into this complex. They want to see it in operation. Now, we must just decide on a private-sector operator. There are options for tenders which will be launched by March of 2018. We assisted in drafting the tender through studies that we conducted. This will be a huge project and we need the best private sector operator to win the tender. With the project now completed, there will be a dedicated railway line connecting the Thriasso-Iconio (28:50) section and the port. This brand-new line will be run by an operator. For us, it is very important to have a good operator winning the tender to run this line.

Are there any other logistics hubs that we can discuss?

Mr Christos Dionelis: Next to Theraso-Iconio there is another hub which is dedicated entirely to the private sector. This will, mainly be warehouses and space to load containers. This will be connected to the railway freight village. This belongs completely to the private sector. We want the two hubs to work together. The tender for this has already been won. Investors here will have to construct their own warehouses – 1020 square meter of warehouses.

And other projects, in Thessaloniki?

Mr Christos Dionelis: Next to Theraso-Iconio there is another hub which is dedicated entirely to the private sector. This will, mainly be warehouses and space to load containers. This will be connected to the railway freight village. This belongs completely to the private sector. We want the two hubs to work together. The tender for this has already been won. Investors here will have to construct their own warehouses – 1020 square meter of warehouses.

In terms of funding for the projects, there is one specific project, which is the Connecting Europe Mechanism. How does this differ from other more traditional routes of funding from the EU?

Mr Christos Dionelis: We, traditionally, from the EU, use the Cohesion Fund, which still exists. It is a mechanism that we use, a lot of projects will be financed by them. The best example hereof is a new project, that we launched the tender for and will publish, to construct a new tunnel from the station of Athens to Agia Varvara. The project is to construct four railway lines under the ground. The inhabitants of the area resisted the idea of further building of railway networks above the ground. They approached the court and the court decided that the network must be built below the ground. This will be financed by CEF. This project, its excavations and construction, will need to be done very carefully, because it is very close to the metro. This tunnel leads to the hub where all the trains are kept every night.

Are there any projects at the moment that are focused on high-speed rail?

Mr Christos Dionelis: In Greece, high speed rail is considered to be at 200 km/h. The government took the decision in 1993, with the Greek Masterplan for Transport. There was a lot of discussion around this and the final decision from the state was that 200 km/h is the maximum. For the connection of Athens-Patras-Thessaloniki, the decision was made that we don’t have massive cities, therefore, we don’t need extremely fast railways.

The rail-projects, have mostly a maximum of 200 km/h?

Mr Christos Dionelis: Yes. You must remember that we have very mountainous terrain. To increase this 200 km/h limit, would mean that costs would escalate dramatically. Construction would be very difficult. Our design speed, the safety speed, is 200 km/h. Our cities aren’t big enough to justify an investment in high-speed rail. Something that is very important, however, is the modernisation of the railway line between Athens and Thessaloniki. In June of 2018, we want to have the entire line fully electrified, double-line. The plan is therefore to have an electric train be able to go the full distance from Athens to Thessaloniki. This will be a landmark for Greece.

How long would that take?

Mr Christos Dionelis: It will be between 3 hours and 3 hours 30 minutes. It will depend on the operator, the type of trains, the timetables. When you look at Greece’s railways, it isn’t as much a network, as it is a line. You must constantly consider all the other towns to ensure that everyone remains connected in the most time-conscious and effective way.

We’ve noticed that your company truly values transparency. Your website provides information and videos showing the progress of all your projects. What do you wish to accomplish with this?

Mr Christos Dionelis: You must realise that over the last 10 years, things have truly changed. There is very strict supervision from the government. This is good, transparency is very healthy. We do our best to remain compliant and we will continue to offer all the information to the public. When you look at our neighbours, such as Montenegro, you see that they are trying to replicate this transparency. They are learning from us and are appreciating our transparency actions. We want to export best practices. We keep track of every Euro that is spent.

I would like to offer you the opportunity to share a final message with the readers of The Times?

Mr Christos Dionelis: We have many projects that will be interesting for private investors. We have so many projects that are very promising for private investors. For example, the railway line to Lavrio – there are a great many cruise ships that come here and thousands of tourists use busses. But, there is a railway line. If we modernise this and make a deal with the cruise lines, it can offer great opportunities. This is one example of private investing. The message I would like to pass over is that we have so many opportunities. The railway networks will be completed and there are so many opportunities that come with them. A good railway line between the ports of Piraeus, Thessaloniki and Alexandropoulos will solve a lot of traffic for Central Europe.

If you consider this, we are only a company of 180 people, yet we work throughout Greece and in the three neighbouring countries. Fifty of our staff have post-graduate degrees. We have a number of PhD’s. We have a number of foreign workers. The message to an investor is that we are a reliable partner in Greece. They can come to us for all the stages of their investment. We are here and can show them the projects we have completed. We can discuss all the technical and financial aspects of an investment. We have a lot project, working with University of Newcastle, which will be a specialised railway project. We know the British codes and standards, many of our people have studied here. We would like to continue to expand this. We prefer working with certain countries over others, such as the UK.