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Cyprus

Port strike on hold, but auditor voices privatisation concerns

Latest dispute is over distribution of work on the dock

 

Limassol port workers decided on Wednesday to give 30 more days to try and resolve a dispute with the general cargo operator over the distribution of work on the dock.

Porters want 100 per cent of the work while the company, DP World, says porters should only deal with loading and unloading ships. However, following industrial action last week, the company conceded 50 per cent of the work.

The proposal was rejected by the workers who went on strike over the weekend and Monday.

At the company’s request, the workers agreed to give 30 days during which the two sides will try and resolve the dispute.

The port has been plagued with problems since its operations were turned over to private hands earlier this year.

The problems have prompted severe criticism from the opposition political parties, and this is expected to escalate after an auditor-general report found shortcomings in the concession agreements.

According to the 55-page report, the success of the denationalisation of the port, especially the state revenues, will depend to a great extent on the implementation of the contractors’ business plan.

The government expects to make some €2bn in the 25 years of the concession.

The audit service does not share that estimate.

Based on the 2016 results and adding a three per cent annual increase for 25 years, the audit service said it expected the state to put between €826m and €1.4bn in its coffers.

A six per cent growth in business would raise the revenues between €945m and €1.7bn; a nine per cent rise would increase profits between €945m and €2.6bn, the report said.

“It looks like the operators’ forecasts are quite optimistic,” the report said, adding that the current value of payments to the state implied an annual rise in revenues of between six and nine per cent.

“Given that the volume of import and export trade cannot be reasonably expected to rise at such high rates, such an increase of revenues, between six and nine per cent, could only be achieved by a dramatic rise in the volume of transit trade.”

But if the real increase was three per cent, the benefit for the state would be €666m, less than the expected benefit under the previous regime.

The audit service noted however, that all three operators were giants in their field, a positive notch for the procedure.

The report also criticises the fact that the concession agreements were awarded by the cabinet without taking into consideration the suggestions, in some aspects, of the attorney-general’s office.

In an email to the ministry of transport the attorney-general’s office said: “The risks assumed by the government were included in the Tender Concession Agreement (CA) upon which the tenderers submitted their offer and accordingly the government has been compensated for the risk apportionment. Nevertheless, the AGO [attorney-general’s office] maintains the view that the tenderers should not have been asked to submit their tenders on a CA, that had not been legally vetted, and without any prior deliberation/consultation with the AGO.”


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