“The state will not be blackmailed,” President Christodoulides said, and he was absolutely right.
He sent a clear message to Kition Ocean Holdings, which has been required for a year now to start the projects included in the €1.2 billion investment in the Larnaca marina and port.
The company, which was given a final extension until June, now wants to change the order of the projects, focusing more on commercial developments (i.e., residential and tourist units).
However, the initial phase of the project includes works that, among other things, involve the expansion of the marina, creation of state infrastructure, and a road connecting Phinikoudes with the port.
Apparently, in an attempt to pressure the state, Kition, which was granted management of the profitable marina and lucrative port on April 1, 2022, refused to sign a €10 million guarantee.
The Legal Service ruled that this constitutes a breach of a significant term of the contract, leading the company to drag the state to court.
Thus, we find ourselves at an impasse, and despite the fact that the company initiated the procedures to start the first phase, it remains uncertain whether construction will begin in June.
It is evident from the public exchange between the Minister of Transport and the CEO of Kition that relations between the two parties are strained.
The President of the Republic intervened, following an appeal from Larnaca Municipality, in a final attempt to resolve the deadlock.
We must also credit the Minister of Transport for not hiding behind his finger, informing the public about what is happening, suggesting that there is an attempt to blackmail the state.
The company also alleges that it is being blackmailed by the state, but it has stopped informing the media and consequently the public. Since journalists cannot meet with them to ask questions, we are left to question their intentions.
Additionally, there is a confidentiality clause, and we know little about what the agreement entails.
It should be noted that behind the large investment is Aroundtown, one of the largest listed property companies on the Frankfurt Stock Exchange.
On March 27, 2024, the company announced losses of €2.4 billion for 2023, adding to the €457.1 million loss announced in 2022, with its stock having lost approximately 30% of its value to date.
This is due to an unprecedented property crisis plaguing Germany, with the company having €3 billion in liquidity.
Therefore, financially, it seems capable of executing the large project in Larnaca; however, its significant losses cannot be ignored. The question is how the markets will react to a potential collapse of the company’s agreement with an EU state.
Regarding Larnaca, of course, a potential collapse of the agreement would be a significant loss. However, it will not be the end of the world, as development has already begun in the area of the former refineries, where investments of hundreds of millions are planned.
Therefore, Larnaca cannot be blackmailed either, and quite rightly, the Municipality, through the mayor, hastened to set the city’s red lines.
