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Cyprus

Government heads for defeat over CyTA changes

By Elias Hazou

Having failed to garner support among the parties, the government bills and regulations concerning the privatisation of state telecoms company CyTA are set to be defeated when they go before the plenum on March 31.

During Monday’s session of the House finance committee, which wrapped up discussion of the bills, it emerged that all parties – including ruling DISY, for their own reasons – would vote down the legislation.

DISY chief Averof Neophytou said later his party, despite supporting CyTA’s privatisation, would vote against unless an amendment of theirs were passed.

The amendment provides that in a future equity issue for CyTA, the majority of the shares must be allocated to a private investor.

Explaining DISY’s position, Neophytou said that if private investors are to be granted a minority stake in a corporation, they will pay far below the share’s real value, whereas a majority stake ensured that the investor would pay fair value, plus a premium.

The aim, after all, was to ensure that the state generate as much cash as possible from partially divesting from CyTA.

A considerable chunk of the cash to be raised in order to pay down a €10bn international bailout must come from privatising state assets.

According to government officials, the new company to be created, dubbed CyTA Ltd, will receive only CyTA’s commercial operations, and only assets relating to commercial operations are to be offered for sale to private interests. CyTA’s immovable property and cash reserves will remain with the state.

Insisting that CyTA should eventually be privatised, Neophytou cited the organisation’s poor track record in recent years. In 2001, when CyTA operated as a monopoly, it generated profits of €190 million, whereas profit forecasts for 2016 range from €50 million to €55 million.

Moreover, said the DISY boss, since 2013 and as a result of poor investment decisions CyTA’s pension fund has accumulated losses of €270 million, while the investment in CyTA Hellas has incurred a loss of €140 million.

But Alecos Tryfonides, head of the CyTA-affiliated PASE-ATIK trade union, panned the DISY boss for speaking half-truths.

A large part of the organisation’s losses are due to the decline in property prices amid the financial crunch, countered Tryfonides.

The syndicate leader also accused DISY and the administration of misdirection.

“Over the past few months they were in a hurry to vote through the bills privatising CyTA, placing a sword of Damocles over the Cypriot people and warning that otherwise we would not receive the last bailout tranche.

“But today, they have suddenly discovered that the bills need to be forwarded to the European Commission Directorate-General for Competition and to ask for its legal opinion.”

He was alluding to the discussion at the committee, where the Commissioner for State Aid Control opined that the bills must be communicated to the European Commission before they are taken before the plenum, so that the Commission can determine whether the bills’ provisions violate laws concerning state aid to the new telecoms organisation.

The issue chiefly relates to the fact the government has guaranteed the pensions of CyTA employees by law.

At any rate, acting committee chairman Angelos Votsis (DIKO) said it was decided to forward the bills to the Commission, but stressed that the bills would go to the plenum on March 31 regardless, whether or not the Commission replies by that time and irrespective of its comments.

Main opposition AKEL also picked up on DISY’s apparent shift in stance.

AKEL MP Stavros Evagorou said the ruling party is now seeking an ‘alibi’ – by citing the reservations of the Commissioner for State Aid Control – to avoid being isolated when the rest of the parties vote down the bills.

 


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