Cyprus Mail

Government signs contracts for Limassol port commercialisation (updated)

By Stelios Orphanides

The government and the winners of a competition for the commercialisation of the Limassol port operations signed the agreements on Monday, in a deal expected to fetch Cyprus €1.9bn over the next 25 years.

The government signed a contract for the container terminal with the Eurogate, Interorient and East Med Holdings consortium and two other contracts with a consortium led by Dubai Ports World which together with G.A.P. Vassilopoulos Plc Ltd, a Nicosia-based shipping and logistics company, will handle general cargo and maritime services.

“The economy of the country gains a new gate for growth” as a “new era begins,” Transport Minister Marios Demetriades was quoted as saying by the Cyprus News Agency.

Demetriades said the deal with the three consortiums would generate a total of €1.9bn in revenue for the government over the next 25 years, according to the Cyprus News Agency. The government received €10m as a signing fee, €7.5, from the Eurogate consortium alone.

Earlier, Demetriades said that he expects that the agreement, the most significant outcome to date, of the privatisation programme agreed with international creditors in March 2013, will attract investment and lead to job creation in the private sector.

“We are applying a model that has been applied in all other European countries and many countries of the world,” Demetriades said in an interview to state-radio CyBC on Monday. “It is a particularly successful model. We have managed to attract major port operators.”

The minister said that the winners of the competition have “a lot of experience and know-how” which could help Cyprus further develop the port’s operations.

Demetriades also dismissed suggestions that the commercialisation of the port’s operations could result to a fee hike by the new operators, adding that the government expects a drop in the cost for port users and an improvement in competitiveness.

“Let’s not forget that caps have been introduced concerning (fees for) operations, which face no competition,” he said. While the caps set for maritime services, which make up less than 10 per cent of total turnover, are higher, competition could allow for prices to drop, he added.

The government will receive a share of 63 per cent of the EuroGate led consortium’s revenue from the container business and more than half of Dubai Ports’ turnover from the general cargo terminal, the minister said. “The share in maritime operations is well below but this is an area which suffered from lack of investment and had to become (financially) viable for the operator,” he added.

The commercialisation of the port’s operations became possible after the government agreed to compensate affected licensed companies and their workers with over €28.6m as well as to offer assurances to the Cyprus Ports Authority (CPA) employees on job security.

Porters and workers at CPA, which in the future will supervise the port’s operations, repeatedly went on strike, often without notice, to force the government to accept their demands on compensation and job security. CPA workers will be offered the choice to either continue working for the new port operators, retire early, or request transfer elsewhere in the civil service.

“About 40” workers are expected to request to be transferred, Demetriades added. “I believe the majority will take the (retirement) scheme,” he said as they will subsequently have the opportunity to work for the private operators after the transition period expires in nine months.

Thomas Heinrich Eckelmann, chairman of EuroGate, said he expects that the Limassol port, which became the 12th port his company operates, will increase its turnover from 307,660 containers in 2014, to 500,000, according to the Cyprus News Agency.

“In (central and west) Mediterranean we handled 5 million containers last year and by adding Limassol in the east, a good addition to our network, we hope to handle 5.5m containers in the next years,” he said.

According to EuroGate’s website, the company handled last year a total of 14.6m TEUs (twenty feet equivalent units – a measure for containers).

Sultan Ahmed Bin Sulayem, chairman of Dubai Ports World said his company, which is interested in growth, took part in the competition after it sensed the prospects offered by the Limassol port. Dubai Ports will be in position to add value and enhance trade, he added.

Bin Sulayem said that Dubai Ports operates in 30 countries where it operates 70 container terminals with an (annual) turnover of 80m TEUs, according to the Cyprus News Agency.


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