The government’s Plan B as the blame game over the new Larnaca port and marina continues

The Government appears to be prepared for all eventualities in relation to the large development project of the marina and the port of Larnaca, and has categorically rejected the accusations of the contractor company Kition Ocean Holdings.

In fact, the Minister of Transport, Communications and Works, Alexis Vafeades, on 24 April clarified that the project will proceed and be completed one way or another, referring for the first time to a Plan B in case the contract with Kition is terminated.

According to Vafeades, in such a case, there are procedures that will be followed for the state to take over the management of the port, initially through subcontractors and then by appointing its own contractors.

On a practical level, this means that the management of the project will return to the state, which, by terminating the contract with Kition, will proceed to announce a new tender in search of a new contractor to continue and complete the development.

The comments in question by Vafeades were made in Parliament shortly after Kition released an announcement which had launched an attack against the Minister of Transport, accusing him of arbitrary deadlines and threats, and while the company itself failed to attend the Parliamentary Committee on Transport, even though it had been invited. The company on 25 April released a new announcement underlining its respect for Parliament and expressing its readiness to attend a new meeting. The company’s full statement can be seen at the end of this article.

How we arrived at the impasse

In the shadow of Kition's absence from the discussion, the Transport Minister briefed Parliament on how things between the state and the contracting company had reached an impasse.

As he said, "On 31 January, the contractor refused to renew one of the three letters of guarantee and at the same time submitted a series of requests to vary the terms of the contract."

The position of the Ministry, he added, "was that in order to be able to evaluate the requests, the contracting company had to submit a renewed letter of guarantee."

According to Vafeades, "the contracting company stated that, according to its own calculations, the amount of the guarantee, which covers the management and administration costs of the project, instead of being €10 million, should have been €4.2 million."

The calculation of this amount, as explained, is the result of an assessment of the actual costs of this process.

"We had replied that, although we do not agree with this amendment, we requested that this guarantee be submitted to us in order to be able to resort to the procedure provided for in the contract to resolve the matter. Whatever the decision of the competent Committee was, it would be acceptable to us as well," Vafeades stressed.

The Minister of Transport then added, "the contracting company has refused, through its actions, to submit this guarantee, it has never submitted it, despite our constant urgings, both written and verbal, to do so, so that we can then proceed in the consideration of the company's requests".

"We always maintain a positive approach to all matters concerning contracts, provided they are covered by legality, by the terms of the contract and by our obligation to safeguard the public interest," he further emphasised.

In relation to the project itself, Vafeades said that it is of the utmost importance for the Government, noting that "it is a contract that we believe will give a new dynamic to Larnaca and to Cyprus in general."

"This company continued until last week to submit the letter of guarantee. After the intervention of the President of the Republic, a meeting was held at the Presidential Office, where the contracting company committed, before the President, to submit a revised letter of guarantee.

We had reiterated our commitment that, as soon as this guarantee is submitted and the contract returns to normality, then we will immediately start a discussion on the requests submitted by the company," he added.

Regarding Kition's requests, Vafeades said that they are quite complex, indicating that "nothing is simple in a contract," while he clarified that "the evaluation of the requests must go through the legal procedures, the competent Committees, it may be necessary to involve other Departments of the state".

Appeal to the Law Office

"We have repeatedly stated our willingness to deal constructively with the matter. After the meeting at the Presidential Palace, we expected the company to submit the letter of guarantee. Unfortunately, it did not submit it by yesterday (24 April), even though they promised to submit it immediately," he said.

After this development, added the Minister of Transport, "we agreed that we should no longer expect that they intend to submit it and therefore we have informed the Law Office and asked for guidance, because the matter is also legal, on how to proceed from now on."

"We maintained and always maintain a constructive attitude, we want to see the project progress, but we have an obligation to protect the public interest as well. We have every obligation to defend our rights. Recognising the importance of the project, we have shown great patience, we have given many opportunities to the contracting company to satisfy its obligations under the contract," he emphasised.

"We expect the Law Office to examine the matter, reach an opinion and give us instructions on how to manage the whole matter," he underlined.

"We do not agree with Kition's accusations"

Commenting, moreover, on Kition's announcement, which was issued shortly before the discussion in the Parliament, Vafeades explained that "our intention, our disposition to be constructive, is a given. The President of the Republic has also said that we will handle the matter immediately. Therefore, we do not agree with the accusations that we are not willing to enter into a discussion."

As for the day after, he said, "it is clear to us that the operation of the port will not stop, there are procedures that will be followed for the state to take over the management of the port, first through the subcontractors and then by appointing its own contractors."

"There are procedures provided for in the contract in case of termination of the contract and we will follow them," he explained.

Law Office: "We will be take a position quickly"

From the point of view of the Law Office, its representative told the Transport Committee that "we will study all the facts and put before the competent Ministry all possible solutions."

Responding to a related question, the same spokeswoman said that "in view of the nature of the matter, the Law Office will take a position quickly."

The Auditor General, Odysseas Michaelides, in his intervention was content to state that "we will not make any statement", noting that "we are monitoring the matter and at some point we will issue a report."

The building permit for the first phase of the works is ready

In his own intervention, the Mayor of Larnaca, Andreas Vyras, said that "the building permit that must be issued to start the works of the first phase is ready and the company can come and get it."

"We wish as soon as possible to have a clear position on how this project is progressing, which is very important for Larnaca, always within the framework of legality and the 'red' lines we set. We are certainly not discussing any new extension for the projects and the critical infrastructure included in the agreement must be carried out," he clarified.

"From there, every effort must be made not to end up in an endless legal process," he concluded.

The President of Larnaca Chamber of Commerce and Industry, Dr. Nakis Antoniou, said that "We want the project to be carried out, because it is of the utmost importance for our city".

The Government’s Plan B

Besides, in his statements after the meeting of the Transport Committee, the competent Minister repeated that "the matter is of the utmost importance for the Government and this is confirmed by the involvement of the President of the Republic himself, who had convened a meeting last week."

Unfortunately, Vafeades continued, “the contracting company has not lived up to its commitments and we have now given up hope that it will live up to them. We have informed the Law Office about this, which, after studying the matter, will give us instructions for the further handling of the case", he underlined.

At the same time, he gave the assurance that "this project will be done, either one way or the other", noting that "we want the contract to proceed in the form it is today, but it must be done legally, with everything legislation and regulations provide.'

"We have red lines and that red line is the public interest, which must be served. At the moment, the public interest says that this guarantee must be submitted in order to proceed with an evaluation of the company's requirements and for the project to proceed within the time limits that have been set," he explained, repeating that "we will proceed in the alpha or beta way to implement this project."

Asked about this, Vafeades clarified that "ideally for us, it should proceed with this contract. We don't want to waste any more time. However, in order for this contract to be implemented, it must be done within the framework of legality and in accordance with what the contract provides."

"If the contracting company does not mean to proceed, this is now a visible possibility, and we will have to manage it as a state. We have an obligation to defend the public interest and that is what we will do. If the contracting company will not proceed, then we will handle the matter according to what is provided in the contract," he pointed out.

"If this contract falls apart, then we as a Government are not going to let this project sit on the shelf, but we will proceed with alternatives. We will find other ways to move forward.

Therefore, Plan B may cause some delay, but our commitment is that the project will go ahead," clarified the Minister of Transport.

Kition's absence

It is noted that the 24 April discussion in the Parliament took place in the absence of Kition, which, although invited, did not attend.

As the Chairman of the Committee, Marinos Moushouttas stated at the beginning of the discussion, the company sent an e-mail through which it informed the House that it had been informed of its invitation to the Commission by the media.

According to the company, the e-mail with the Commission's invitation had been blocked by the company's security measures and could not be traced until the morning.

In light of the above, Ktion informed the Parliament that it could not attend with a representative, but expressed its readiness to participate in the work of the Committee by telephone or video conference.

However, the attitude of the contracting company was strongly criticized by all the MPs, with Moushouttas characterising the company's objections as unacceptable.

The company has since issued a statement, expressing its respect for Parliament.

The statement in full can be seen below:

“Kition Ocean Holdings reaffirms commitment to Parliamentary processes and open Communication

Kition Ocean Holdings (Kition) expresses its deepest respect for the Parliament and its processes. We regret the miscommunication that led to our non-appearance at the session of the Parliamentary Committee on Transport, Communications and Public Works. This incident was not reflective of our intent and does not indicate a lack of respect or commitment on our part.

We were made aware of the invitation to the Parliamentary Committee yesterday (24 April) morning after it was reported in the media. By that time, it was too late for us to attend in person. We attempted to participate virtually, but unfortunately, this was not feasible.

Kition Ocean Holdings is committed to full transparency and constructive dialogue with all stakeholders, including the Parliament. We wish to clarify that we are prepared to meet with the committee at any available opportunity moving forward. Our team is ready to participate in future discussions through any format that facilitates productive engagement.

We continue to be dedicated to the successful implementation of the Larnaka Port and Marina redevelopment project. Kition Ocean Holdings is keen on maintaining a collaborative approach to achieve mutual objectives and ensure the project’s success that is significant not only to our company but also to the economic and social fabric of Larnaka and Cyprus.”

(Source: InBusinessNews)