Minister threatens legal action over Larnaca port delays
The government will resort to the Legal Service if the consortium in charge of developing Larnaca’s port and marina fails to make the financial guarantee payment by the end of the day, Transport Minister Alexis Vafeades said on Tuesday.
Last week, Kition Ocean Holdings agreed to renew their financial guarantee after a meeting chaired by President Nikos Christodoulides.
The amount of the financial guarantee under the contract amounts to €10 million. However, the agreed amount to be placed by the consortium at the moment stands at €4.2 million.
“We believe that one week is a reasonable time frame for someone to issue a guarantee for this specific amount,” Vafeades told the media.
“If by the end of the day the guarantee is not submitted, we will contact Kition Ocean Holdings to see what their intentions are and to verify whether they encountered any problems.
“If we perceive that the company has no intention of submitting the guarantee, then we will turn to the Legal Service for guidance on handling the contract.”
Vafeades, however, admitted that no legal deadline was set for the submission of the guarantee, but that he considered a week was long enough.
“No deadline has been set. We agreed to allow the consortium a reasonable amount of time to deposit the guarantee. I consider one week and one day a reasonable amount of time,” he said.
“We are facing a very substantial breach of the contract, it is a very serious situation, and our handling of it must be equally serious.”
Vafeades, though, explained that the delay will not result in an early termination of the contract signed with the consortium.
“The termination of the contract is a complex process, as it concerns a critical state infrastructure. Therefore, the contract cannot be terminated,” he said.
“However, and this is provided for in the contract, in case termination is deemed necessary, there is a procedure that describes step by step how the state could take over the operation of the port. We do not want to reach that point, unless absolutely necessary.”
Asked why the content of the contract is being kept secret from the public, he explained that “many public contracts have a confidentiality clause.”
“This specific contract for the unified development of the Larnaca port and marina is confidential and can be only disclosed to MPs, provided that the confidentiality of the contract is maintained.”
Recent reports indicated that Kition Ocean Holdings asked the government to first proceed with development works in areas adjacent to the port and marina area, before starting operating on the port and marina itself.
“We face the same issue in many contracts, as contractors always try to change schedules or situations for their benefit,” Vafeades said.
“What we are obliged to do is to protect public interest, and this is defined through the terms of the contract. If we can assist [the consortium], we will do so, provided it falls within the framework of legality.
“In this case, the competent committee appointed by Kition Ocean Holdings, consisting of experts from various fields who have expertise on all arising issues, will evaluate the consortium’s requirements.”
They would then convey their position to the government which would respond to the consortium accordingly, Vafeades concluded.
According to the terms of the contract, works at the Larnaca port and marina will begin in June.