IN JULY 2016 consultants from Ernst & Young presented their study for the unified development of Larnaca port and marina. Reporting at the time, the website Larnakaonline said the government would have a preliminary study ready by September of that year so that tenders could be invited as soon as possible and the successful bidder could be chosen by the middle of 2017. “According to the existing planning, the successful bidder should be in a position, if unforeseen obstacles do not arise, to start the first works in 2018.”
On Tuesday, almost three years after this report, the government announced that it was cancelling the competition inviting tenders for the development of Larnaca port and marina as a single project, for ‘legal reasons’ and would be engaging in direct negotiations with the last remaining bidder. The other two bidders had withdrawn their interest some time ago, leaving the consortium of the Israeli companies Ampa Ltd and Israeli Shipyards Ltd on its own to negotiate with the government, which said negotiations would have no time limit.
The development of Larnaca marina and port has become something of a running joke. The project had been originally awarded to the Zenon consortium in 2010, but the agreement was abandoned in 2015, despite the government granting numerous extensions to enable it to secure the necessary funds. Nine years on, in an attempt to save face, after the spectacular failure of the latest tenders’ procedure, the government has decided to enter negotiations with the Israeli consortium in the hope that a deal could finally be bashed out.
This seems like an act of desperation, putting the state in a rather weak negotiating position against the consortium, but inevitable knowing the mentality of technocrats that feel duty-bound to set tough requirements for bidders as if the objective is to discourage them. Last year, Larnaca mayor Andreas Vyras, warned that the clause setting a 900,000 tonnes per annum limit on cargo was a disincentive to the Israeli consortium. This limit, however, was in the terms agreed by the company that took over Limassol port that wanted to restrict the threat of competition. It is understandable that the bidders object to such a restriction, but if it is lifted the government would violate its contract with the company operating Limassol port.
It is a big mess. The plan for the development of the port and marina as a single project seem too complex, if not unfeasible. These are, after all, two very different projects and their incorporation into one that has to be undertaken by a single contractor is probably why the tenders’ procedure attracted only three bidders, two of which pulled out early in the process. Perhaps it is time to rethink the whole project. We have become accustomed to the delays.