Li­mas­sol port goes to ten­der

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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