The €1.2 billion investment in Larnaca port and marina is seeking a lifeline as it now appears to be at risk of sinking.
The government and Kition Ocean Holdings are engaged in a blame game over the deadlock, with the company pulling strings by dragging the state to court.
The most crucial aspect is that two months before the expiry of the new extension granted to the company, no one knows if and when the projects included in the first phase of the largest investment in Cyprus, which was supposed to start a year ago, will commence.
The revelation by the Transport Minister that the company breached a crucial term of the contract by not renewing a €10 million guarantee for the port forced the company to publicly comment on the controversy for the first time yesterday.
A statement that highlighted the significant gap between the two sides emerged through an unprecedented attack on the government by Kition’s CEO, Oliver Corlette, who claimed that the company was threatened and intimidated with contract termination.
Expressing the company’s readiness to implement the projects, he urged the government to “fulfil its obligations”.
Corlette mentioned that the company had submitted requests to modify the project implementation phases, which are necessary for its sustainability, but do not, as he claimed, alter its nature.
“These requests are to address the dramatic changes in macroeconomic conditions as per the contract, but the government refuses even to discuss them with us,” he said, adding that a disagreement arose between Kition and the government regarding the calculation of the non-renewed guarantee amount.
“We raised this issue in a timely manner and asked the government to sit down with us to review the calculations, so that we could deposit the correct amount. They refused to participate in the process stipulated by the contract and tried to intimidate us by threatening contract termination. We met with them several times to open this discussion, but they refused to discuss the calculation, even though the issue could have been resolved very quickly. Last week, we filed an application in court requesting a decision ordering the government to follow the contract,” he noted.
The CEO of Kition also referred to the tendering process for the projects, expressing the company’s readiness to commence the works.
“The only thing holding us back is the government’s refusal to honour our agreement and speak to us directly. We will continue to try. We are ready to discuss and resolve all outstanding issues, so that the project can proceed; however, we are sitting alone at the table while the government prepares to make unilateral decisions. The nature of the project is a long-term partnership that requires full cooperation and flexibility from both sides to succeed. We will continue to try, and we hope the government chooses to have a constructive dialogue, rather than make unilateral decisions and destroy every opportunity this project has to succeed,” he added.
Dismissing rumours that the company lacks the financial capability for the major investment, Corlette said that Kition has already invested significant resources and that the progress of the project depends on the government.
“Unfortunately, mainly due to the government’s reluctance to participate in the necessary discussions and to honour the agreed terms, the project is at risk of delay. This attitude of the government has cost us valuable time, but it has not discouraged us from continuing our efforts or our commitment to the project.”
Regarding the company’s decision not to inform the media and consequently the public about the progress of the project, he claimed that it is prohibited by the contract, noting that Kition, whose main shareholder is Arroundtown, decided to break its silence due to the government’s statements in order to inform the public about “the real situation”.
Vafeades refutes the company’s claims
The Minister of Transport responded immediately and strongly refuted the company, reiterating that the non-renewal of the guarantee, according to a legal opinion from the Legal Service, constitutes a breach of an essential term of the contract.
“We have explained to them many times that the changes they want cannot be correlated with whether they will renew the guarantee or not,” Vafeades stated to Phileleftheros, expressing the government’s readiness to discuss the company’s demands. “However, this can only happen after the renewal of the guarantee,” he added.
He also noted that when the company was informed that the state now has the right to cash in on two other guarantees that are in force, Kition resorted to the courts.
“They obtained an interim order, which states that we are not entitled to cash in on the remaining guarantees until both the company’s position and the government’s position are heard in court.”
The case is scheduled for April 15th, and preparations are already underway by the Legal Service, which will subsequently provide advice on the state’s next steps.
“What the company’s CEO claims, that we are not discussing their demands, is not valid, because we have clearly requested the renewal of the guarantee first, and then we will discuss whatever they want. I believe the company’s arguments do not reflect the true picture of the matter,” the Minister of Transport pointed out.
Larnaca municipality calls for Christodoulides’ intervention
Meanwhile, the bodies of Larnaca continue to express strong concern about the turn of events, with the Municipal Council calling for the direct intervention of the President of the Republic.
Yesterday afternoon, an emergency meeting of the Larnaca Municipal Council was held to be briefed on the issue.
In a subsequent announcement, the members expressed their concern, indicating that they had supported the major investment from the outset, intervening to resolve the arising problems.
The Municipal Council has called on the President of the Republic to personally get involved in resolving the issues that seem to be arising.
Concurrently, as noted, “it will convene the City and District Development Committee of Larnaca, to which the Minister of Transport, Communications and Works, Alexis Vafeades, will be invited to brief on the problems that have arisen in relation to the project’s implementation.”
