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Call for review of Hermes deal with the state on Tymbou compensation

Tymbou (Ercan) airport

By George Psyllides

SINCE 2006, the state has paid €46m to airport operator Hermes as compensation for loss of revenue due to the operation of an airport in Tymbou (Ercan), in the Turkish-occupied northern part of the island, MPs heard Thursday.

The issue was discussed in parliament with MPs and independent state officials calling for a review of an agreement struck between the state and Hermes who had been granted the concession.

In 2002 when the state issued the conditions of the tender for a strategic investor to take over Larnaca and Paphos airports, it had pledged that it would not create a third airport.

But the opening of the crossing points linking the island’s divided communities in 2003 changed the state of play. The condition was inserted in the agreement, which was signed in 2006.

The agreement provides that Hermes would build and manage the airports for 25 years, or until 2031 when they will return to the state.

The state receives 33 per cent of the company’s revenues each year and has so far collected around €417m. In 2017 it received €50m.

Transport ministry permanent secretary Alecos Michaelides said the compensation was calculated by a complex formula, which takes into account Tymbou airport’s passenger traffic as well as that of Larnaca and Paphos. Data for Tymbou is provided by the secret service.

He said the agreement also includes certain forecasts and when the actual traffic in the two airports exceeds them, then the state would stop compensating Hermes.

Based on the agreement, the formula can be reviewed every three years.

The company said that in the first three years the two sides had observed the formula as it had been originally agreed. Between 2009 and 2014, there had been a lengthy negotiation with the company eventually collecting €33m.

The two sides have yet to agree on the three years between 2015 and 2017. MPs heard however, they seemed to agree on €23m.

The committee heard that authorities did not have an accurate figure for Greek Cypriots using Tymbou and they relied on guesstimates based on the number crossing over to stay at hotels in the north.

Auditor-general Odysseas Michaelides said the EU had examined the condition and decided it was justified under the circumstances.

Airport General Manager Eleni Kalogirou said Tymbou currently moved some four million passengers, triple than 2006, while Larnaca and Paphos are 50 per cent up.

Kalogirou said passenger traffic now was seven per cent lower than what the company expected by 2018, adding that there was also a ceiling in the compensation it could receive and if the upward trend continues in a couple of years it would stop.

MPs agreed that the agreement must be reviewed and amended if possible. Some demanded measures against those Greek Cypriots who use the airport.

But in 2004 when the state tried to punish someone for using the airport, it had lost the case in court both in the district courts and the Supreme Court.

The court said the state was “acting completely against what was announced and being implemented by the government (re: Green Line Regulation) and the prosecuting authority of the Republic targeted, of all the citizens of the European Union, the defendant and charged him.”

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