The highly-publicised €1.2 billion redevelopment of Larnaca’s port and marina is heading for the rocks, with the risk of the biggest investment in Cyprus turning into a fiasco, Phileleftheros reports.
What is a fact is that the mammoth investment is now in limbo, as the contracting company has breached a material term of the contract, according to the Minister of Transport Alexis Vafeades, who is awaiting advice from the Law Office of the Republic.
Kition Ocean Holdings, whose majority shareholder is the European colossus Aroundtown, refuses, according to Vafeades, to renew a €10 million guarantee for Larnaca port unless its submitted requests are discussed first. The company, for its part, blames the government for the impasse.
Speaking to Phileleftheros, the Minister of Transport noted that the contracting company, which took over the keys to the marina and port two years ago, is obliged under the signed contract to have three guarantee letters.
However, the one concerning the management of the port and its personnel expired on January 31, 2024, and instead of renewing it, Kition, according to Vafeades, submitted a list of requests for changes regarding the works to be executed.
“We told them we were open to discussion, as we do with all contractors, but for their requests to be examined by the competent committee, the €10 million guarantee must be renewed. The company refused, so we sought advice from the Law Office, which told us that the renewal of the guarantee is a material term of the contract and must be restored before we can move on to other issues.”
Rejecting the notion that the government is to blame for the observed complication, he pointed out that it is now a legal matter. “Unfortunately, they are presenting it as if we don’t want to meet with them, but we have shown nothing but a spirit of cooperation until today. When they requested extensions, they were granted, always under certain conditions. Regarding the guarantee, they initially told us it should be €4 million instead of €10 million. We tried to facilitate the process by telling them to bring the €4 million and we would sit down for discussions to find a solution. But they didn’t bring even that. At this stage, the matter is now legal. We have given the company a lot of time since the day the contract was breached (January 31). During these two months, we have been trying hard to convince them to renew the guarantee, to no avail. Now that they refuse to renew it, we are awaiting instructions from the Law Office on how we can proceed.”
The company did not renew a €10 million guarantee
Asked whether the changes requested by the company would alter the nature or amount of the investment, Vafeades replied that this could only be answered once the company’s requests are evaluated by the competent committee. “The committee may accept or reject them. I cannot prejudge the decision. However, since the guarantee has not been renewed, this process cannot proceed, and we have conveyed this to them.”
In the meantime, if the company does not commence the work for the first phase of the project by next June, which was supposed to start in April 2023, it will essentially constitute a second breach of the contract. A contract that only the government and the company know, as there is a confidentiality clause.
It is noted that the Minister of Transport’s statement was made following yesterday’s letter from the CEO of Kition Ocean Holdings, Oliver Corlette, to the President of the Larnaca Chamber of Commerce and Industry (LCCI), Nakis Antoniou.
In this letter, as mentioned by the President of the LCCI to Phileleftheros, Corlette states that the company is ready to start the works within the set timeframe, but the government refuses to engage in dialogue with them to make the project viable. “He is asking for renegotiation on some points and has requested our help. We will be meeting with Kition to hear their demands, and if we can, we will help because we want this project to materialise.”
Larnaca Mayor Andreas Vyras reacted strongly when we presented him with the issue of the breach of contract, as conveyed by the Minister of Transport. “What Aroundtown is doing is blackmail, and it should not be accepted,” he said, noting that the Municipal Council will convene on Thursday to discuss the matter.
Meanwhile, DEPA MP Michalis Yiacoumi has tabled the issue in Parliament, and it will be discussed on 18 April in the House Transport Committee. “The concerns being voiced are also ours, as this project is the flagship of development in Larnaca, and many have based their investments in the city and province on it. We have called on all stakeholders to provide answers on what is holding up the project and what the company is asking from the government.”
Read more:
