While the deadlock between the state and Kition Ocean Holdings over the unified redevelopment of Larnaca port and marina may have been resolved, shadows over the future of the largest investment in Cyprus are still looming.
The Audit Office is rushing to draw the red lines. Based on information suggesting that the company is seeking priority in land development to raise funds for the remaining part of the investment, the Audit Office clarifies through Phileleftheros that infrastructure projects in the port and marina are mandatory and essential terms of the agreement, preventing any change in the design.
The spokesperson for the Audit Office, Marios Petrides, explained that in the concession agreement given to Kition, land and land plots were allocated for exploitation to make the project sustainable, provided, however, that mandatory works in the port and marina are executed.
“The core obligations of the contractor are the projects in the port and marina. For these projects, there are specific design requirements and, of course, timelines. Land development (i.e., residential units, restaurants, shops, etc.) is largely their choice for what and when to do,” he pointed out, citing examples regarding the obligations of the contracting company.
Regarding Larnaca port, according to Petrides, the company’s obligations include:
- Hosting cargo activities to serve local commercial needs and industry, including mooring, loading, unloading, and storage of goods.
- Hosting activities for cruise ships.
- Serving cruise ships with a minimum length of 330 meters.
- Implementing a cruise terminal with a building area of at least 500 sq.m.
- Hosting Cyprus Navy and foreign naval vessels/providing maritime services.
- Hosting government users (infrastructure projects for state services).
As for Larnaca marina, the required projects include:
- Developing a marine area to achieve a capacity of 600 berths for boats up to 50 meters.
- Restoring the land area of the marina, including all buildings and infrastructure required for its operation.
- Hosting government users.
- Developing space for boat maintenance.
Most of these projects are planned for Phase A of the project, for which the company has submitted several change requests.
Therefore, the Audit Office has requested updates by Friday on this matter and several other issues, aiming to immediately inform the Parliament’s Control Committee and initiate its audit of the large investment, estimated to be completed by the end of the year.
“To date, information suggests that the contractor seeks to reduce obligations and focus on land development. We have requested updates, and what I can tell you is that such a scenario is not an option for the Government. The Government does not have the flexibility to modify the projects. European directives, and thus Cypriot legislation, determine which changes are allowed in a contract, and these concern non-mandatory works. If the contractor argues, for example, that cruise traffic forecasts have been reduced, this is not a reason for changes because the concession agreement states that the contractor assumes the operational risk,” emphasized Petrides.
Furthermore, if there is a proposal for changes, it must be presented before the Central Committee for Changes and Requirements.
“This is the competent body, and there we will also express our views. We will not prejudge anything, but what we say is that discounts on mandatory projects cannot be made,” the spokesperson for the Audit Office pointed out, indicating that if the contractually defined completion date for mandatory projects passes (i.e., 31/3/27 for Phase A), the stipulated clauses must be enforced.
“We already observe significant delays that suggest a serious likelihood of missing deadlines. We remind that since April 2022, the contractor has been collecting port and marina fees. He cannot collect without completing the obligatory projects,” noted the spokesperson for the Audit Office.
The project must begin in June
Regarding the meeting at the Presidential Palace on Monday, during which, following an intervention by President Christodoulides, the company agreed to pay part of the guarantee for the port to validate the contract, Petrides noted that it was the right handling, and now the difference between the state and the company will be referred to a fast-track dispute resolution process. Meanwhile, he emphasized, “the project must proceed, as such a difference does not constitute a reason to suspend the procedures.”
The latest statement from the Audit Office indicates that Kition Ocean Holdings, whose main shareholder is Aroundtown, must start the major projects at the marina and port by next June, as it is the last extension given to them by the state. However, so far, the contracting company has not publicly clarified whether the Phase A projects will start in a month and a half.
It is noted that the company, two years exactly after taking over the keys to the marina and port, has executed very small-scale projects, while the protected quay has not yet been officially delivered. Among other things, a restaurant and playground were created at the marina, as well as a large parking area serving the visitors of the Phinikoudes.
If no extension was given, as revealed in a previous report by Phileleftheros, the first projects should have already been delivered, and several others should be in progress, both at the port and the marina.
Among these is a significant infrastructure project for Larnaca concerning the creation of a road connecting the Phinikoudes waterfront with the port’s roundabout.
For this project, as well as several others related to the marina’s expansion, licenses will be issued by Larnaca Municipality on April 26, with the contracting company having also initiated a tendering process.
However, as mentioned earlier, it remains unclear when these projects will start, with the company continuing to prioritize its demand for changes.
