Cyprus Mail
Cyprus

State to sell land to help reduce debt

The planned Qatari development opposite the Hilton

By Elias Hazou

A government bill paving the way for the sale or lease of state land has been submitted to parliament.

Drafted by the interior ministry, the bill would allow the sale or leasing – via public tender – of land plots in urban areas belonging to the state or state-owned enterprises – such as semi-governmental organisations – slated for privatisation.

Passage of the law stems from Cyprus’ obligations under the Memorandum of Understanding with international lenders, the aim being to raise cash to trim the public debt.

“The [privatisation] plan includes the privatisation of, inter alia, CyTA (telecoms), EAC (electricity), CPA (commercial activities of ports), as well as land assets,” the MoU states.

Cypriot authorities must “appoint independent advisors with relevant expertise and develop a plan with detailed intermediate steps and timings for disposing of the identified real estate assets by November 2014. The privatisation plan identified by the Government after consultation with the programme partners will raise at least €1 billion by the end of the programme period and an additional €400 million by 2018 at the latest, which will be used for public debt reduction.”

According to Phileleftheros, a privatisations action plan approved by the Cabinet with regard to state land notes that “emphasis will be placed on large commercial and usable plots of land” which may belong to semi-governmental organisations earmarked for privatisation and which are currently not being used for commercial purposes.

The Cabinet recently authorised the ministers of finance and the interior to ensure that a study on ways of making use of state property be carried out by consultants to be hired by the privatisations commissioner. The study, writes Phileleftheros, will take into account not only state-owned land plots and fields but also government buildings.

The Department of Lands and Surveys has valued state property – not including forest land – at over €7b, the paper said.

Upon passage of the law another clause of the MoU will be implemented, providing for the transfer of state assets worth €1bn to the Central Bank. The exercise will involve a concurrent reduction of the state’s debt to the Central Bank by the same amount. This MoU obligation must be implemented by the end of 2014.

The list of land plots – which may include prime real estate in towns – is in the process of being compiled.

And last month the Central Bank invited a public tender for a contract for valuation of land plots so that independent valuers can ascertain that the real estate transferred to it is worth €1bn.

The arrangement relates to a loan the Central Bank had granted the government prior to entry into the eurozone. At the time, the Central Bank was able to exercise monetary policy – it is no longer able to – and as the lender of last resort had lent the state some €1b.

Upon the conclusion of the MoU with the troika in 2013, the bankrupt government struck a deal with the Central Bank to repay the €1b loan not in cash but real estate.

Up until now, the law prohibited the sale of state land. It’s understood for example that this was a key reason why a deal for a Qatari investment opposite Nicosia’s Hilton hotel had fallen through. The Qataris had wanted to purchase the land but the government at the time was only willing to lease it.

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