Thessaloniki Metro: Major issue with private investors – They will receive €292 Million

The Mitsotakis government seems determined to break records for communication success, jubilantly inaugurating the Thessaloniki Metro despite the nationwide collapse of the country’s railway system during its tenure. The event also emphasizes the introduction of private companies into the metro system.

The inauguration of the Thessaloniki Metro, which consists of a 9.6-kilometer line connecting only some of the eastern areas to the city center, is scheduled for Saturday, November 30, 2024. It will be another “success story”. The delays of a project that was supposed to begin in the 1980s, has faced countless obstacles, and is now being completed at a cost three times higher than the original budget (estimated at 2.5 billion euros compared to the initial 0.8 billion euros) will be forgotten amid the applause of the inauguration.

Immediately afterward, the challenge of making an untested driverless system work smoothly, ensuring that residents are served without problems, and creating new “hotspots” around each of Thessaloniki’s 13 stations will begin. Then come the consequences of success: the extension of the metro to other areas (beyond the already planned extension to Kalamaria, expected to be operational in 2025). The next major project will be the extension of the metro to the underdeveloped but densely populated western suburbs of the city, where every announcement leads to a surge in land values and expectations of massive profits in real estate.

The party originally planned for the inauguration of the Thessaloniki metro was scaled down in terms of planned events. It was even in danger of being canceled, not only because of preparation failures (such as the huge controversy over the 30,000-euro direct contract for the logo), but also because of repeated incidents on the “above-ground” rail system, where yet another near-collision between trains was revealed.

In a recent interview, Thessaloniki’s Deputy Minister of Infrastructure, Nikos Tachiaos, addressed safety concerns. When asked about the safety of the metro, he insisted that “it is very different from the railway” and that it has two tunnels that “prevent head-on collisions”. Meanwhile, just as he was making these statements, news emerged of a near-collision between two trains traveling in the same direction in Korinos, Pieria. Earlier, in September, there had been a near head-on collision in Agioi Anargyroi, Attica, and in October, a suburban train nearly entered the Athens metro tunnel.

These incidents show that the only real change since the Tempi disaster has been the increased vigilance of train drivers, who are on the front line of danger, while traffic control systems are underperforming and there is a lack of adequately trained staff to fill the gaps. The worst part? Incident investigation mechanisms remain neglected, which should be identifying problems to eliminate the causes of future accidents. In all three of the above incidents, the investigation procedures are flawed in key areas, with a visible risk of being swept under the rug, similar to the aftermath of Tempi.

The private sector as the solution to every problem

The Mitsotakis government, however, is preparing to prove that it is not only unperturbed by such problems, but also has a “magic formula” ready: privatization. This is a tried-and-true solution that also appeals to supporters from the political center. The story is simple: The collapse of the railroad’s credibility is not due to the impunity of those responsible, the staff shortages filled by irregular hiring practices, or the costly contracts that amounted to billions of dollars without producing results. It’s due to human error and the weaknesses of the public sector! And since mistakes are not prosecuted because they are made by people who vote, the solution will come from private companies that will take over public services – for a fee, of course.

This has already happened in the transport sector with public transport in Athens and Thessaloniki, where KTEL bus companies have gradually taken over parts of public transport. It also happened with the Italians of the former TRAINOSE and now Hellenic Train, with well-known results. However, the metropolitan railway system has remained under the jurisdiction of the public sector until now. In Athens, the metro is built by the public sector through Hellenic Metro (formerly Attiko Metro) and operated by STASY. In Thessaloniki, it was built by Hellenic Metro, but the operation was entrusted to THEMA, a Franco-Italian consortium of the companies ATM and EGIS.

The contract with THEMA was signed in October 2023, when the government said that the Thessaloniki Metro would be operational before the summer of 2024. Through this contract, which is considered a public-private partnership (PPP), THEMA will receive 292 million euros over the next 12 years to take responsibility for the daily operation, maintenance and security of the Thessaloniki Metro. It’s important to note that the metro was built in such a way that the trains do not require drivers. This means that THEMA will not have to pay hundreds of employees or negotiate with them on “unpleasant” issues such as collective agreements and safety conditions. Most of the staff will be employed in traffic management, which will be handled by remote control systems, maintenance and administrative tasks.

The operation of a driverless system after the Tempi disaster sparked considerable debate, and the government mobilized significant communication resources to convince the public that the driverless metro would be perfectly safe. With its proven communications superiority, the government repeatedly assured the public that it would “ensure safety,” as the now-disgraced Minister of Infrastructure and Transport Kostas A. Karamanlis had claimed before the Tempi tragedy.

Metro without an operating license

Last week, however, an amendment introduced by Kostas Karamanlis’s successor, Christos Staikouras, to a bill by the Ministry of Digital Governance (for cybersecurity) raised some questions among those who read it. The amendment concerns the “licensing of urban railways” and how this will be done “for passenger transport services”, “with the assumption of the operation and maintenance of the network by a public or private entity providing a public service”.

According to the amendment, this license will be issued with minimal documentation, specifically a certificate from an independent certification body, a declaration of intent to take over the operation, and two certificates from the General Registry of Commerce (GEMI) for the establishment of the company. This is in stark contrast to the extensive documentation required for the licensing of railway companies and the penalties these companies face for failing to comply with the terms of their licenses.

Speaking in Parliament in support of the amendment, Infrastructure and Transport Minister Christos Staikouras linked the new licensing regime to the Thessaloniki metro project: “Such a modern project as the metro cannot be associated with bureaucratic ambiguities or outdated legal and administrative regulations, some of which have even been abolished.” Thus, he explained, “a clear permitting framework is being formed and the required certificates and actions are being outlined in order to establish a transparent permitting process that incorporates modern international certifications.”

The translation in simple terms

The translation in plain Greek is that the “Thessaloniki Metro” did not receive an operating license until now (just as the Athens Metro did not) and will now receive one under the new regime. However, when the government signed the contract with THEMA in October 2023, it was clearly stated that the consortium was also responsible for “issuing the necessary licenses for the operation of the metro”. As for certification by an independent body, government officials have emphasized hundreds of times that they secured the approval of the internationally renowned certification company TUV Rheinland after testing all possible scenarios for unforeseen events.

However, Staikouras’ amendment is clearly not only about the Thessaloniki metro, but could also be applied to the Athens metro, where the government is also expected to bring in private companies to take over maintenance and operation in order to free itself from the “mistakes of the public sector”. If the Thessaloniki metro performs well, it is expected that the plan to outsource to private companies will continue, as the government expects to make people forget the failures of privatization in the Greek railway system, especially with the Italians in Hellenic Train.

The Tempi tragedy blocked the plans for a long time. The massive human losses, the handling of the investigation with cover-ups and the continuous incidents considered as “precursors of new accidents” removed the government’s argument that the “bad privatization” of SYRIZA was to blame. Moreover, before the Tempi disaster, the current government had signed a new public service contract in which it agreed to subsidize the Italians with 750 million euros over 15 years.

Ektoras Chandakas: From Tempi to Thessaloniki

The key question is whether the government will convince the public that “the Italians of Hellenic Train are different from the Franco-Italian consortium of THEMA in the Thessaloniki metro”. This will soon become clear, but there are some signs that suggest striking similarities, such as the government’s tendency to intervene in the staffing of both companies. There is also an interesting story about a certain individual who came from abroad as a “brain gain” in 2021 to work first at Hellenic Train (formerly TRAINOSE), and left after the Tempi tragedy and was placed at Thessaloniki Metro.

This person is Ektoras Chandakas, currently the Technical Director of THEMA and formerly the Deputy Operational Director of TRAINOSE-Hellenic Train. Mr. Chandakas was personally introduced to the public by Prime Minister Kyriakos Mitsotakis during the pandemic in November 2020. On November 27, 2020, a video conference was held at the Maximos Mansion with selected Greeks who had left Greece due to the brain drain.

According to information at the time, Mr. Mitsotakis invited those who wanted to work in Greece to “take advantage of the great opportunities that are already opening up on the road to the next day after the pandemic.” The government promised tax breaks for those who return, and participants in the videoconference asked questions and offered opinions. Among them was Mr. Chandakas, who was in France at the time, and who, according to primeminister.gr, said that the tax incentives “are fine” but “the most important thing is how the state will treat us” and asked for “meritocracy and a state that is an ally”.

I fear an accident

The Greek state seems to have decided to be an ally of E. Chandakas, who returned to Greece after a few months and became an executive at what was then TRAINOSE. He assumed the position of “Assistant COO”, as he states in his LinkedIn profile – essentially Assistant Chief Operating Officer – and describes himself as “a manager overseeing more than 500 employees of a railway company that operates 12 million vehicle kilometers annually”. By October 2021, Mr. Chandakas had already assumed responsibility for train crews and their training when he gave an interview to Kathimerini’s K magazine. He explained that the decisive factor in his return was the quality of life: “To be able to swim at a beach just 20 minutes away is an unfulfilled dream in Paris,” he remarked. Asked what he feared, he replied: “The possibility of a systemic accident, meaning that while the country has momentum and I want to be part of it, something could go wrong and force me to leave – not by choice, but by necessity. For example, another crisis could occur.”

Tragically, an accident did occur on the railroad he managed. In addition to passengers, 11 engineers and crew members lost their lives. Despite this, E. Chandakas stayed with Hellenic Train for a few months in a reduced capacity until THEMA began hiring. In January 2024, as he also states on LinkedIn, he became the technical director of the company in charge of operating and maintaining the Thessaloniki metro. However, reports suggest that there is a strong possibility that he will soon return to Hellenic Train.

The cost of the celebration

In Thessaloniki, the celebrations have already begun, especially for the government officials who will attend the inauguration on November 30. Especially in the Ministry of Infrastructure and Transport, the budget is being stretched to the limit, with travel expenses approved and published on the “Diavgeia” platform, covering costs for air travel (of course) and accommodation. Here are some of the expenses we found:

• 11,540 for the travel of Minister Christos Staikouras and his entourage.
• 4,764 for Deputy Minister Vassilis Oikonomou and his entourage.
• 5,070 for the General Secretary of Transport, Despina Paliarouta, and her entourage.
• 2,784 for the entourage of Deputy Minister of Infrastructure Nikos Tachiaos, who, as a native of Thessaloniki, has effectively been camping out in the city for days, covered by previous expense approvals.
• 3,303 for the General Secretary for Infrastructure, Konstantinos Magoulas, and his entourage.

Nearly €28,000 for a ceremony that lasted only a few hours, and that is just for officials of the Ministry of Infrastructure and Transport. For context, a recent decision on the “Diavgeia” platform approved €15,934 for Mr. Staikouras and his entourage for a three-day trip to New York between December 7 and 10, 2024.