The value of transit trade conducted through the port of Limassol has declined sharply since 2017 when the harbour’s commercial operations were privatised, lawmakers heard on Monday.
The drop in business was attributed to the uncompetitive rates offered to container ships. During the same time period, however, revenues to the state – via the fee paid by the port’s concession holders – have gone up.
The numbers came up during a discussion of the Cyprus Ports Authority’s (CPA) 2021 budget at the House finance committee.
CPA head Petros Krassas said that prior to denationalisation, the port of Limassol used to offer competitive rates compared to neighbouring harbours.
“Now we are having a difficult time attracting [ships] because we are more expensive than nearby ports, like in Egypt,” he told legislators.
According to data shown to MPs, container traffic at the port took a nosedive after the port’s privatisation. The numbers cited were in TEUs – or twenty-foot equivalent unit, a measure used for capacity in container transportation.
Transit trade amounted to 17,077 TEUs in 2014; 26,476 TEUs in 2015; and 45,922 TEUs in 2017.
After the port was privatised, TEUs fell to 6,245 in 2018; and to 2,813 in 2019. There was a slight increase in 2020, to 4,197 TEUs.
The CPA used to have a contract with a transit trade company, but it expired in 2016.
A transport ministry official said the state earned €201 million from the port’s operation between 2017 and the first quarter of 2021; compared to €115 million from 2012 to 2016, before privatisation.
Speaking to reporters later, Akel MP Stefanos Stefanou said the government’s promises that privatisation would lead to increased traffic have been shown to be empty words.
“From what the ministry has told us, the port of Limassol has become more expensive and less competitive. The costs to export trade have increased significantly, and these are costs borne by businesses and Cypriot industries.”
Also on Monday the House finance committee went over the 2021 budget for the Grains Commission, even as the government ponders scrapping the semi-governmental organisation.
The government has previously tabled bills that would abolish the Grains Commission – operating at a loss for years – and have its staff transferred to the agriculture ministry.
MPs heard that the entity’s cash reserves will not take it through 2022.
The Grain Commission’s budget for 2021 provides for €5.2 million in projected revenues but €12.3 million in expenditures – a deficit of €7.1 million. For perspective, the entity’s cash reserves at the end of 2020 stood at €6.1 million.
Moreover the entity is in debt to the tune of €10.5 million.
The Grains Commission was established in 1960 as a state-controlled monopoly, in order to ensure the lowest possible prices for grain imports which it delivered to local businesses and maintained the country’s strategic reserves. With accession to the European Union in 2004, however, the grain market was liberalised and the state-run importer was forced to operate under free-market conditions.