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Cyprus

Larnaca port deal to be signed with Zenon on June 15

By Andria Kades

THE government aims to strike a deal with Zenon consortium for the development of Larnaca port and marina by June 15, communications minister Marios Demetriades said on Thursday.

The often delayed project is expected to cost €700m and will be operated by Zenon for a period of 35 years.

“For us to enter this phase of negotiations, it means we have ensured that there will be funding at least for the first phase of the project,” the minister said.

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 in 2012 but has since been receiving extensions as it was unable to secure funding.

Demetriades said the issue of financing was settled – at least for the first phase of the project expected to last six years – and provided everything went as planned, things would start moving ahead in July.

“This is a project that if it goes forward, will greatly contribute to Larnaca’s development,” he added.

The cost, divided in phases, would involve port infrastructure at the first stage and commercial development of the port and marina at later stages. Lawyers are currently drafting the contracts and negotiations are in their final stages to ensure the paperwork is ready to be signed by June 15.

In regards to energy companies engaged in hydrocarbons-related activities within the port, they will relocate by August 2016, as per a Cabinet decision to accommodate the project elsewhere.

The proposal submitted by Zenon foresees the largest section of the port used for commercial and passenger vessels, while one section would be utilised for commercial purposes.

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

Delays were caused when local banks set to bankroll the project pulled out following the 2013 financial crisis and the consortium started seeking funding elsewhere for the marina component of the project.

Zenon members proposed to put up the initial investment of about €40-50m from their own equity, to get the project going.

Port workers in Larnaca held strikes several times over the constant delays amongst fears that Zenon would change their initial contract and might be granted the right to receive rent paid by companies that lease establishments at the port’s grounds.

Because of a mistake in the original contract, the consortium already receives general port rights on fuel from every ship that loads or unloads goods at Larnaca port. That money should have gone to the Ports Authority.



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