2024: A year that seriously damaged Cyprus’s investment reputation

2024 will go down in history as a year that seriously damaged Cyprus’s investment reputation, with the collapse of several high-profile state projects. Just before ringing in the new year, three major public works — the Vasilikos energy terminal, the redevelopment of the Larnaca port and marina, and the Paphos-Polis Chrysochous road — have all faced major setbacks, raising concerns about the country’s ability to manage large-scale infrastructure projects.

According to Kathimerini's Apostolos Tomaras, the most significant of these failures is the stalled Vasilikos terminal, the largest energy project in Cyprus’s history. A dispute between the state-owned ETYFA and the Chinese consortium, CPP-METRON, has left the project in limbo, with no clear completion date or financial resolution. There’s uncertainty about additional costs and the economic and social consequences, especially as legal proceedings unfold. The project was supposed to be finished by now, but it’s unclear when it will be completed, if at all, leaving the energy sector and taxpayers in the dark.

Another blow to the country’s investment prospects comes from the termination of the contract with Kition Ocean Holdings for the redevelopment of Larnaca’s port and marina. Despite being touted as a massive €1.2 billion project, this venture failed to take off, with the consortium not fulfilling its promises, leading to the contract’s cancellation. After two decades of delays, Larnaca’s port is still at square one, with no clear timeline for when redevelopment will actually happen. Officials are now considering breaking the project into two parts — the marina and the port — but the process is slow, with the next steps not expected until 2026.

Meanwhile, the much-anticipated Paphos-Polis Chrysochous road project has been delayed repeatedly. First promised in the 1990s, the road’s first phase was due for completion in 2024, but as of now, only 21% of the work has been done. The contractor, INTRAKAT, is now embroiled in a legal dispute over claims and guarantees, and residents in the area face yet another delay, with the road now expected to be completed by 2027.

These setbacks come at a time when the Cypriot government is grappling with a series of systemic issues in public procurement and project management. Despite multiple investigations, it’s clear that changes are needed to prevent future failures, particularly with €1.2 billion worth of infrastructure projects still underway. The government is under pressure to address these problems and restore confidence in its ability to handle public works.

As 2024 comes to a close, Cyprus faces a tough road ahead, not just in terms of completing these troubled projects, but in addressing the broader structural issues that have led to these failures. The coming months will be crucial as officials work to rectify the damage to the country’s investment image and ensure that future projects do not suffer the same fate.

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