THE inexplicable decision by the government to allow Larnaca municipality the final say on the presence of the onshore support services for oil companies at Larnaca port has caused many unnecessary problems and will deprive the state of significant revenue. As is well-known, the Larnaca municipal council voted by the narrowest of margins for the removal of the onshore support service from the port despite the fact that ENI and Total were satisfied with the facilities and did not want to relocate to Limassol.
The government could have over-ruled the municipality’s vote, which was bad for the economy and for the town, as the ports are under the state’s authority, but it did not want to alienate Larnaca’s voters and went along with the decision that has triggered a host of costly problems. No attempt was made by government to argue its case and explain the significant benefits for the town of keeping the support services at the port which had no other revenue sources, since the early ‘90s when the greedy unions drove the cargo transit business away.
Now, there is a dispute at Limassol port between EDT, which is offering an onshore support service for Total’s drilling operation, and the concessionaire P&O Maritime that, contractually, has a monopoly on any activities relating to gas and oil at the port. Although EDT’s base is in the government-controlled area of the port it would have to pay the concessionaire with which it came to an arrangement for the operation of an onshore logistics base until the end of 2018. The port operator DP World plans to build a mud plant to serve oil companies in Limassol port, but the residents of the town have not tried to prevent it.
If the government did not base its decision exclusively on populist considerations, it would have turned Larnaca port, which has had no business for years, into a centre for onshore support services for drilling operations. This would have ensured a revenue stream for the state, created jobs and kept oil companies happy as they prefer Larnaca port because it is not congested like Limassol’s. Most importantly, Larnaca would have become the gas and oil business centre of the island. All types of companies offering oil and gas support services would have set up offices there, creating jobs and boosting the town’s economy.
Municipal councillors were incapable of seeing the potential of keeping this business in their town and, worse still, the government did not have the courage to point it out to them, for fear of losing a few votes.