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Cyprus

State pledge on Larnaca after Zenon deal dies

The doomed plans for new marina project included luxury apartments

By Andria Kades

The government insisted on Wednesday it wanted to do everything possible to develop the Larnaca marina, after negotiations with Zenon consortium – the team of investors who were to develop and fund the project – were officially terminated.

This may prove to be difficult as no other investor has shown interest, Communication and Works Minister Marios Demetriades said after a meeting in Larnaca on Wednesday with the mayor Andreas Louroutziatis, local MPs and councillors.

“No other investors have come. At the moment, our first thought is to hold a workshop with some potential investors that can give us their ideas because, whatever plans you have on paper, if there are no interested investors, you can’t bring those plans to life,” he said, speaking the day after the government announced it would allow no more extensions to the beleaguered agreement with Zenon which dated back to 2010.

Dinos Lefkaritis, executive finance director of Petrolina – one of the four companies comprising Zenon Consortium – insisted on Wednesday that they had only needed an extension to the June 15 deadline by a few days because they were waiting on some legal papers.

“There was no problem over the funding,” he told the Cyprus Mail, adding that the government was perfectly aware that this was all they needed.

This was emphatically denied by Demetriades who said the consortium had received up to 20 extensions so far and failed to meet them.

Both parties signed a commercial agreement in 2012, under which the consortium was supposed to secure funding for the project within six months, while the first and second phase projects were to have been completed within the following three years.

Reportedly costing €700 million, the project would have allowed the investor to privatise the Larnaca port with infrastructure works including a new passenger terminal and develop the marina for private yachts. The project incorporated 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.

Following the economic crisis, local banks set to bankroll the project pulled out leaving the consortium seeking funding from elsewhere. Zenon members proposed putting up the initial investment of about €40-50m from their own equity, to get the project going.

Demetriades said the Zenon consortium had been given so many extensions to secure funding, “with the aim, hope and wish that the project would move ahead because it is a project that is very important for the city of Larnaca”.

One idea on the table is to invite a team of investors in September or October to present them with the initial thoughts on how to proceed with the Larnaca port.

Demetriades reiterated that any plan would focus on commercial development and “it is certainly out of the question that it will be industrial”. The cabinet’s decision that energy companies engaged in hydrocarbons-related activities within the port would relocate still stood he said.

At present, the port is under the management of the Ports Authority and the marina by the Cyprus Tourism Organisation.

“We will do everything possible to keep the specific development moving forward and its main idea is tourism and commercial development right where the port and marina are – that is our aim,” Demetriades said.

Louroutziatis echoed his comments saying that “the process for the project with Zenon consortium has been declared invalid and this is negative because there were decades of efforts for the project” however he focused on the positive side that the main efforts were geared towards commercial development.

Larnaca port employees had been long standing critics of the Zenon project because they feared the terms of their contracts would be changed following the privatisation of the port.

“Larnaca has been trapped for 10-years due to these extensions…we are waiting to see what the future will hold for employees,” SEALK union general secretary Andreas Gregoriou said.

As a union member opposed to privatisation of the ports in general, he said there should be a separation of the two projects. One for the port, which should not be privatised and remain under the management of the Cyprus Ports Authority, while the marina could be sold to a private investor.

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Source: Cyprus News Agency

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