The CEO of Kition Ocean Holdings, Oliver Corlette, launched a scathing attack on the government, essentially holding it responsible for the impasse over the non-renewal of a €10 million guarantee for Larnaca port.
Expressing the company’s readiness to proceed with the €1.2 billion mega-investment in the marina and port, provided that changes requested by the state due to geopolitical conditions are discussed, Corlette reveals that the company has taken legal action against the state to compel, as he says, “the government to comply with the agreement.”
At what stage are the works for the commencement of the redevelopment project of Larnaca Port and Marina?
Kition is prepared and fully equipped to begin construction of the project on schedule according to the contract. The original master plan, approved by the town planning department, was crafted by US-based engineering firm AECOM, and the first phase of the real estate development is now being designed by the international architectural firm HKS. This phase also includes collaboration with Cypriot-based design firms to enhance local design expertise.
The enhancements to the port and marina were designed by Greek firm Rogan, and we have implemented a design and build strategy for the marine works. We have received bids and are currently evaluating them to ensure value and precision in our selections.
Significant expansions to the port’s capacity are planned, including a new administration building, updated facilities for the navy and marine police, and an agricultural building. These facilities are currently out for tender.
A new passenger terminal has been designed in consultation with world-renowned cruise lines to welcome passengers from the Schengen Zone and we are already in negotiations for the first hotel operator for our planned hotel project.
The development of the project is a long-term (more than 15 years) partnership between Kition and the government that is, by this very nature, subject to the volatility of macroeconomic and geopolitical changes. We expressed to the government on many occasions several concerns regarding the long-term viability of the project, especially following the massive construction cost inflation, dramatic increase in interest rates, regional wars economic slowdown and more.
The Concession Agreement, alongside Cypriot laws and EU directives, has been tailored to address such challenges, and we anticipate that the Cypriot Government will meet their obligations to consider these broader economic effects.
In such a long-term project, both parties need to work together, hand in hand, and be flexible to overcome together the challenges of the market and the project. And there is a flexibility mechanism to deal with unexpected circumstances that may arise over a period of more than a decade.
However, the government refuses to follow this Agreement and engage with us to discuss the concerns we have about making the project commercially viable for both KOH and the Republic. Consequently, Kition has sought legal recourse to compel the Government to comply with the agreement.
How do you respond to comments that the company does not have the financial strength to execute and complete the project it undertook?
Kition has already invested substantial resources into planning, designing, and preparing for the commencement of construction. Our commitment to the project’s success is unwavering, and we are actively working towards its realisation. The cash reserves are ready to be deployed for the full implementation of the development program according to the agreement.
It’s important to clarify that the progress of this project is currently contingent not solely on our actions but also constructive engagement from the government. We are diligently reaching out to government officials to adhere to the agreement and address pending issues so we can advance.
This project, structured in multiple phases over the long term, requires close cooperation between Kition and the government to effectively navigate and surmount many challenges.
Unfortunately, largely due to the government’s reluctance to engage in necessary discussions and adhere to the agreed terms the project is at risk of delay. This approach by the government has indeed cost us valuable time but has not deterred our efforts or commitment.
Why is there a reluctance from the company to inform the media and, by extension, the community about the progress of the project?
We respect the local community and the media who want to bring to the public accurate news. The project is important to the people of Larnaca and Cyprus in general and the public naturally wants to be informed. So far we have not spoken because we have been complying with our obligations under the agreement with the government which restricts statements to the press unless the government approves.
We have previously been stopped from speaking to the press, however, following last week’s extensive media coverage and statements made by the government, we have decided to let the public know what is going on and the true situation.
We have put forward requests to amend the sequence and program of works which are necessary for the viability of the project but do not affect the nature of the project. These requests are to enable us to deal with the dramatic changes in the macro-economic circumstances in line with the agreement but the government is unwilling to even discuss with us.
At the same time, one of the guarantees was expiring and there was a difference between KOH and the government regarding the calculation of the amount of the guarantee. We raised this promptly and asked the government to sit down with us to review the calculations so that we could put forward the correct amount.
They refused to engage in the process prescribed by the Agreement and tried to bully us by threatening to terminate the agreement. We met with them several times to try and open this discussion, but they refused to discuss the calculation even though it could have been resolved very quickly but to no avail.
Last week we applied to the Cyprus courts seeking an order to get the government to follow the agreement. We respect the court’s proceedings so we will not comment further on this matter.
What we want to stress is that we care about the project, and we want it to succeed. We have finalised the design and planning, we have applied for the town planning and construction licenses, and we are ready to burst into action.
The only thing holding us back is the government’s refusal to follow our agreement and to talk to us expeditiously. We will continue trying to engage. We are ready to engage and resolve all pending matters so that the project can proceed, however, we are sitting alone at the table while the government is preparing to take unilateral decisions, while the nature of the project is a long-term partnership which needs full cooperation and flexibility from both sides to make this project successful.
We will continue trying and we hope the government will choose to have a constructive dialogue instead of taking unilateral decisions and blowing up any chance this project has to succeed.
