The government, through no fault of its own, has been pushed into a tight corner by Kition Ocean Holdings, the company that has the contract for the development of Larnaca port and marina, estimated to cost €1.2bn. Despite its efforts to resolve the dispute, including a meeting at the presidential palace on April 15, Kition seems intent on making a bad situation worse.

At that meeting, it had undertaken to pay the €4.2m operation and management (O&M) guarantee for the port by April 23 and failed to do so. The amount was a concession by the government which had wanted the original amount of €10m paid, but accepted the smaller amount until the dispute resolution process was completed and the final figure decided. Kition, however, insists that no O&M guarantee should be paid until the process stipulated in the concession agreement was completed.

In a show of arrogance, the company ignored an invitation to attend the House transport committee meeting that wanted to discuss the matter on April 24, claiming it had not seen the email sent to it a week earlier and had only been informed about the meeting from the press a day before it was scheduled to take place. This blatant disregard for the legislature, combined with its refusal to stick to the agreement reached at the presidential palace could only be viewed in one way – Kition is operating under the assumption that it is in an unassailable position and can act in any way it wants.

It is a valid assumption, considering the government and the Larnaca authorities are desperate for the project to proceed. If the concession agreement was terminated, apart from the legal battles that would ensue, there would have to be a new tenders procedure, which could put the project back by 10 years. Given the great difficulty in finding a company to take on the Larnaca project in the past, the authorities, understandably, are terrified of embarking on a new process, from scratch. Larnaca mayor Andreas Vyras’ insistence, last week, that all necessary actions should be taken and all efforts for a compromise exhausted, was indicative of the alarm over the stalemate.

Transport Minister Alexis Vafeades, who has been publicly attacked by Kition for his alleged refusal to engage in dialogue with it, has sought the advice of the Legal Service on how to proceed. This unjustified attack was another example of the strong-arm tactics being used by the company, which has exploited what it views as government weakness, for years now. The contract was signed in 2020 and the development was supposed to have been completed by 2025, but the company had been granted extension after extension, without commencing proper work. It has, however, drastically increased all charges for docking fees and other facilities offered to boat owners and pleasure boat operators, without improving services.

Kition has also thrown the idea of being allowed to start the more profitable aspect of the project – building villas and flats – before beginning work on the port and marina. The government, quite rightly, is refusing to discuss this, as Kition Ocean Holdings cannot be trusted. It has repeatedly shown its bad faith, constantly trying to exploit the weak position the government finds itself in and pushing hard to gain an advantage. We know that terminating the contract would be disastrous, but Kition has left the government with no other choice.