Cyprus Mail

Zenon partners to kick-start venture with own money

By Elias Hazou

A CONSORTIUM proposing to transform the Larnaca port and marina hopes to conclude an agreement with the government by year’s end, putting the oft-delayed project back on track.

The Zenon consortium – consisting of the Paraskevaides Group, Iacovou Bros, Petrolina and Vouros – signed a contract with the government for the development of the Larnaca port and marina worth a reported €700m.

The contract was on a public private partnership (PPP) basis.

Under the contract, the consortium was supposed to secure funding for the project within six months from its signing, while the first and second phase projects will be completed within the next three years.

Since late 2012, when the contract was concluded, the government has granted Zenon six extensions.

Local banks set to bankroll the project pulled back following last year’s financial crisis and the consortium started seeking funding elsewhere for the marina component of the project.

It appears, however, that both the search for foreign partners and financing has been unsuccessful.

Zenon members are now proposing to put up the initial investment amount (reportedly €40-50m) from their own equity, to get the project going.

“We hope to get financial closure with the government by the end of the year,” Dinos Lefkaritis, executive finance director of Petrolina, told the Cyprus Mail.

Once completed, the new port would become the main passenger port of Cyprus able to accommodate large cruise ships and have the potential to serve commercial vessels. The project would feature parks, restaurants, recreation space, shops and other public areas.

At its first phase, the project provides for port infrastructure such as a new passenger terminal, while the second and third phases involve the expansion of the port and marina. The project also incorporates development of a land area totalling 200,000 square metres, including the building of five star hotels, leisure and retail development, all linked via a promenade to ‘down town’ Larnaca and its beaches.

The marina will have a 500-berth capacity at the first phase and will later expand to 1,000 berths.

Complicating matters, two energy companies – Noble Energy and ENI – have set up their shore-base operations within the port, situated next to the marina, and which happens to be an integral component of the grandiose tourism development plans.

The Cyprus Ports Authority (CPA) has, meanwhile, given permits to at least five more companies engaged in hydrocarbons-related activities to operate out of the port.

CPA head Alekos Michaelides told MPs on Thursday that all the lease contracts for these companies include a clause stating that they may be required to relocate should their presence there interfere with the planned port/marina project.

That’s because the Zenon consortium has priority in the development of the port.

In such a case, the companies would have to pack up and move within six months of such a decision. It’s understood that the leases given to the companies are for three years.

Larnaca MPs said that a way should be found to accommodate both the port/marina development as well as hydrocarbons-related activities at the site.

Energy expert Charles Ellinas said that a compromise would likely be struck concerning Medserv, the outfit operating the shore-base on behalf of ENI.

The Italian-Korean venture ENI-Kogas is currently conducting offshore exploratory drilling for natural gas. Its shore-base is located at the south quay of the port, which is not in the way of the first stage of the development envisioned by Zenon.

Local activist groups have been voicing concerns over the environmental and health impact from hydrocarbons-related activities there.

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