Cyprus Mail

Limassol port to generate €2bn over 25 years (Update-1)

Transport Minister Marios Demetriades

(Adds more minister comment in second and seventh paragraph)

Transport minister Marios Demetriades said on Thursday that the government expected €2bn to flow into the state coffers over the next 25 years from the commercialisation of operations at the port of Limassol.

The current value of revenues “will exceed €1bn. You (can therefore) realise the magnitude of this deal and its importance for the Cypriot economy,” Demetriades said, after briefing the members of the House Transport Committee about the outcome of the port’s privatisation process. Parliament will to have to ratify regulations prepared according to the privatisation law before the government and the three successful bidders sign the final agreements. A meeting between the bidders and the government is scheduled for Thursday.

“Let me remind you that when some initial predictions were made with respect to revenue we could collect from the Limassol port, we were discussing smaller amounts,” he said.

Cyprus agreed to privatise the commercial operations of the Limassol port as part of a privatisation programme worth €1.4bn agreed with international lenders in exchange for a €10bn bailout. The programme also provided for the privatisation of state telecom Cyprus Telecommunications Authority and power producer Electricity Authority of Cyprus. In an interview in September, Demetriades said that the port’s privatisation would have a small contribution in revenue compared to the rest of the programme.

The minister of transport said that the government will receive €10m in the form of a down-payment from the three contracts plus a percentage from the revenue which differs from contract to contract.

The government’s share from the container business, awarded to a consortium led by Germany’s EuroGatte, will be 62.71 per cent, while that from maritime services and general cargo, both awarded to consortiums led by Dubai Ports World, will be 10.1 per cent and 52.1 per cent respectively, the minister said.

He added that based on the business plans submitted by successful bidders, non-tax revenue was expected to exceed €40m and overall revenue including taxes €45m, compared to an average revenue of €22m in the past three years. “If we also take into account the money they will invest in superstructure, we are talking about an expected benefit of around €50m,” he said.

The new port operators are expected to invest over €100m ininfrastructure in the years to come, he said.

“These figures are particularly beneficial for the Republic of Cyprus and exceed our initial expectations,” he said adding that the government will receive almost €9.2m every year even if the port’s revenue falls to zero.

In January to June 2015, the port of Limassol handled 143,802 TEUs (twenty-feet equivalent units), which measures the capacity of containers, 7 per cent less compared to the respective period of 2014, according to the website of the Cyprus Ports Authority. Handled cargo dropped in the first half of 2015 an annual 13 per cent to 1,464,118 metric tonnes while the number of serviced ships also fell 13 per cent to 1,352.

Limassol will become a port that “will really serve regional needs and this is our true vision and the big benefit,” Demetriades said.

Demetriades did not rule out “some changes” to the contracts agreed with investors, which may concern the duration of the transitional period. Investors also asked for a list of workers at the Cyprus Ports Authority as they are interested in hiring Cypriot staff.

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