Prosperity puts its proposal to develop the marina and port of Larnaca back on the table

While discussion and efforts to restart the ambitious and vitally important development of the integrated development of the marina and the port are intensifying, Prosperity Group CY, a 20% shareholder in the Kition Ocean Holdings consortium, has put a proposal on the table for some time now for it to return to the project.

The submitting company suggests its proposal most capable and also the most realistic to get the development out of the freeze it has been in for approximately eight months.

More specifically, it concerns the expressed and officially registered interest of Prosperity Group CY, a 20% shareholder in the Kition Ocean Holdings consortium, whose contract - it is recalled - was unilaterally terminated by the state last March, in taking over the entire project again, and completing it.

Prosperity, the company that had the vision for the implementation of the project and that successfully designed and secured its licensing, in its letter from last August to the Minister of Transport, Communications and Works Alexis Vafeades, and also through the submission of its relevant interest on the "e-Consultation" electronic public consultation platform, announced its request to examine the possibility of reviving/restoring the concession agreement to the company (Kition), through the signing of a new agreement with identical terms to those of the original concession agreement.

The ultimate goal is for construction work to continue on the basis of the masterplan, as agreed with the government and subsequently licensed by the competent authorities, and with the company appearing ready, in the event of acceptance of its proposal, to take specific actions so that the concession agreement and, by extension, the project, can be immediately be put back on track for implementation.

What does the Prosperity proposal foresee?

As InBusinessNews has been informed, among other things, Prosperity is ready, if its proposal is accepted, to acquire a significant share, or even all of the shares held in Kition by its other shareholder, increasing its percentage to an extent that will make it exclusively responsible for all of Kition's activities as a contractor, and by extension of the project.

Extremely significant and indicative of Prosperity's intentions through its proposal, is the commitment it would be undertaking, such as that, if the validity of the concession agreement is revived, it will be in a position to proceed immediately and within a time frame to be agreed on with the state in the issuance and deposit of the O&M (Operations & Maintenance Guarantee) for the amount of €4.2 million, as well as all other guarantees, as provided for in the concession agreement and which have since expired.

In fact, the company appears ready to do so, as, if at a later stage it becomes clear that based on the concession agreement or the financial model, the amount of the specific guarantee should be different from the amount in question, then either a new amount should be agreed upon or the dispute resolution process should be followed to determine it, in accordance with the provisions of the concession agreement.

This position of Prosperity, as stated in its proposal - and as sources from the company who spoke to InBusinessNews argued - essentially confirms the consortium's position that Kition never refused to comply with the provisions of the original concession agreement, but also its position regarding the state's forced decision to terminate the contract.

And this, as the same sources claimed, is because even after the disagreement on this specific issue arose in January 2024, the consortium had proposed a similar methodology for resolving the dispute with the aim of continuing the contract and ensuring the project’s smooth implementation.

It is recalled that the state set the value of the guarantee at €10 million and its non-renewal by Kition was the main reason cited by the contracting authority to proceed with the unilateral, and according to the company, illegal termination of the contract.

"Compensations and the risk that is eliminated"

As the same sources further underlined, an extremely important and essential point in Prosperity's proposal, which, according to the same sources, should be emphasised and taken into account, is the fact that the company makes it clear and unambiguous that in the event of the implementation of what is mentioned above, namely the reinstatement of the content of the concession agreement and the actions it will take, all possible legal proceedings pending between the parties regarding the concession agreement will be withdrawn as settled.

This is essentially, as they indicate, a development that will eliminate a major risk that, as things currently stand, is hanging over the state's coffers. That of a potential payment of huge financial compensation to the company, with the bill of course being paid at the end of the day - as always in similar cases - by none other than the taxpayer.

It is recalled in this regard that Kition, considering the termination of the contract illegal and unconstitutional, has already sent a letter to the contracting authority, based on which it claims at least the amount of €37,707,696 million as a Termination Payment based on the terms provided for in the concession agreement.

Additionally, it reserves its rights to claim compensation for loss of revenue or future profits from the Republic of Cyprus as a result of the termination.

"Only in this way will we be back on safe implementation tracks"

The sources from Prosperity who spoke to InBusinessNews expressed the opinion that, as can be easily understood from the above, as well as for a number of other reasons they cited, the proposal submitted by the company to return the project to Kition Ocean Holdings, seems to be and is the only path that can lead to the restart of the unified development of the marina and the port of Larnaca, putting the project back on safe implementation tracks, away from what they described as experimentation and nostalgia.

In this context, they described it as obvious, among other things, that the company has the appropriate knowledge, the appropriate experience and the appropriate know-how, as well as the appropriate and required personnel, which, having been employed and trained in the past, can immediately work effectively to carry out the project.

"At a time when the state seems to have trapped itself in the impasse it created for itself with its hasty and erroneous - as it turns out - decision to terminate the contract with Kition, the company, having the financial and technological sufficiency to carry out and execute the project immediately, could, through the acceptance of Prosperity's win-win proposal, revive the vital development of the marina and port of Larnaca. And with it, the dreams of thousands of residents of the city and province."

Waiting for a response from the minister

It is worth noting that in addition to the letter to Alexis Vafeades and its submission to the electronic public consultation platform, the Larnaca ad-hoc committee for the integrated development of the marina and port was also officially informed about Prosperity's proposal, which asked the competent minister since the beginning of last December - without so far, according to the sources, receiving any response - to study it and take it seriously.

The same sources expressed disappointment over the fact that, as they reported, several months after a "sufficiently documented and advantageous" proposal for the construction of the project was submitted by Prosperity through the most official means, the company's people were not even invited to discuss it.

Even more so, they emphasised, since - as they believe - there do not appear to be any other serious and reliable alternative options on the table, and while the company's proposal is, according to the same sources, a completely reliable option that can easily and “painlessly” provide the state with a way out of the impasse that has arisen since the day the contract was terminated.

In this context, they further indicated that any attempt to re-assign the project through a new tender, in addition to the risk of not submitting a profitable proposal, will result in a delay in the start of its development for approximately six to eight years, while the financial cost that the state will incur will be extremely large and disproportionate to make such a thing achievable.

The concern and questions raised

Going a step further, the sources from Prosperity who spoke to InBusinessNews, placed the story of the integrated development of the Larnaca marina and port in the light of the broader effort being made by the state to attract quality foreign direct investment to Cyprus. They raised the question of how it is possible that proposals from existing investors are ignored and remain unanswered.

They questioned whether this is the appropriate tactic and the appropriate image projected abroad for a state that wants to attract direct foreign investment, but which at the same time, with its overall attitude and behavior - as they argued -, pushes investors who are already in the country and are willing to invest huge sums for large and complex projects - such as the Larnaca marina and port - out of the island.

(Source: InBusinessNews)