Limassol port goes to tender
The government is going to tender this week to invite bidders for the three services at Limassol port, the island’s main port of call that accounts for 80% of passenger traffic and 70% of all commercial activity.
The House of Representatives approved the much-delayed framework only last week that paved the way for the privatisation of three key services to three operators or a single consortium for all three.
Transport, Communications and Works Minister Marios Demetriades said that the first phase will call for ‘expression of interest’ from prospective operators who will be shortlisted and a final selection made in the first quarter of 2016.
He said that initial interest was received by “some international” operators who were sounded by the Ministry’s consultants Rothschild.
Commercial services at Limassol port, where improvement works are already underway, such as the expansion of the container terminal and the new passenger terminal, will be privatised as part of the government’s obligations to international creditors who bailed out the island with a 10 bln euro programme in 2013.
The aim is to raise about 1.4 bln from the privatisation of state assets or denationalisation of services and utilities, to make the economy more competitive and less reliant on its rigid civil service.
Limassol port, the driving force of the island’s economy in the 1970s, gradually lagged behind other regional rivals and has become most uncompetitive, losing business for shipment and tarns-shipment to the likes of Piraeus, Malta and Haifa, despite the island’s maritime fleet being among the ten biggest in the world and a leader in shipmanagement.
The port, burdened with uncompetitive rates and crews, currently handles a mere 300,000 TEUs, while Piraeus, that has gone to tender this month to sell off the remainder of the state-owned stake, handled ten time as much last year. Malta Freeport, that underwent a privatisation process of its own some ten years ago, currently handles 2.75 mln TEUs and aims to increase that figure to 4 mln over the next 1-2 years.
“We are strategically located across from the Suez Canal, that, too, is enjoying vast investments and we have to become competitive once again,” said Minister Demetriades.
“We have been left behind and we cannot delay the process even a single day,” he said.
Ministry Director and Chairman of the Ports Authority Alecos Michaelides said that the three services that will be put out to tender are for the container terminal, multiple-use facility (incl. passenger terminal) and marine services, with the first two licences offered for a 25-30 year concession and the third concession for 1020 years.
He said that once the preferred bidder is chosen, negotiations will begin for the final contract with the winning operator and the CPA working in parallel for the initial period.
“After that, the CPA will become the landlord of the three main commercial ports of Limassol, Larnaca and Vassiliko and its role will change to one of regulator and supervisor,” Michaelides said.
He added that earnings at Limassol port alone are about 20 to 25 mln euros a year, which the new operator is expected to increase to about 4-5 times that amount, including investments in infrastructure and superstructure upgrades, such as modern equipment, better cranes, berthing of larger vessels, etc.
In his double capacity as CPA Chairman, Michaelides said that all of the Authority’s staff will remain and probably moved to other services, while licensed port workers are negotiating a compensation, as are dockworkers, all of whom may be re-hired by the new operators.