The companies running the commercial activities at Limassol port have agreed to suspend hiking their freight and handling fees until the end of the month while talks are ongoing with the government.
Earlier this year, the operators announced an average 16 per cent increase in their charges, citing their own rising electricity, fuel and labour costs.
The hike is within the companies’ contractual right to re-adjust charges, based on an index included under the 2017 agreement with the state for the port’s privatisation.
But the coming hikes have sparked concerns about inflation, as importers would inevitably pass on their higher costs onto consumers.
In parliament on Tuesday, the transport ministry’s permanent secretary Stavros Michael said efforts are underway on two tracks: first, a possible compromise between the state and the port operators; and secondly, that the state might absorb part of the fee increases.
The latter idea came from the ruling Disy party, which has proposed that the state give up the share of the charge rise it was entitled to from the operation of Limassol port.
It’s understood that more than 50 per cent of the port’s revenue goes to the state, which has collected some €50 million each year since it was privatised in 2017.
However the auditor-general has cautioned that such a measure would require the nod from the European Commission, as it could be considered a form of state aid.
The issue of the impending fee hikes has meanwhile opened old wounds, with main opposition Akel saying it is a reminder of the ‘scandalous’ deal concluded by the government for the privatisation.
Akel MP Costas Costa cited a report issued by the Audit Office dated April 5, 2017 which he said was “damning” of what transpired leading up to the signing of the 2017 port concession agreement.
He recalled that back in May 2018 parliamentarians had asked the attorney-general to look into that report to determine whether any criminal or other liability existed. The attorney-general has yet to respond.