Apostolos Tomaras
Nineteen months after the termination of the contract, and while procedures are under way for construction works on the redevelopment of the Larnaca marina and port to begin, the Kition Ocean Holdings consortium is attempting to return to the project. According to well-informed sources of Kathimerini Cyprus ("K"), during the intervening period the consortium prepared the legal groundwork in order to achieve its objective, which is the annulment of the contract termination and the re-award of the major €1.2 billion project for the Larnaca district. Information from “K” states that Panagiotis Alexandrou, CEO of Kition Ocean Holdings, to whom the redevelopment had originally been awarded, held meetings with the Minister of Transport, Alexis Vafeades, during which he conveyed the company’s desire to take over once again and resume the ambitious Larnaca project from where it left off. Meetings between the two sides were confirmed to “K” by both the Ministry of Transport and Kition Ocean Holdings. As we are in a position to know, the Minister of Transport told his interlocutors that he would seek an opinion from the Legal Service in order to clarify whether a potential return of Kition Ocean Holdings to the project would run into legal obstacles.
Kition Ocean Holdings
The consortium’s intention to return to the contract that was terminated on 27 May 2024 is based on legal advice it has obtained from Norton Rose Fulbright, a British-American corporate law firm that was present at the meeting with Alexis Vafeades. The legal opinion sets out the reasons, as well as the steps that must be taken, for the termination of the contract to be annulled and for the consortium to return to the project. The consortium, which is awaiting a response, has requested a meeting between its legal advisers and the Legal Service; however, this has not taken place to date.
The Ministry of Transport has requested an opinion from the Legal Service on whether it is feasible to re-award the project to a company whose contract was terminated due to breaches of essential terms of the project.
From the consortium’s side, it is argued that Kition Ocean Holdings is willing to renew the €4.2 million bank guarantee, which was the reason for the termination of the contract. What remains unclear for the time being is whether the consortium will take legal action should the Legal Service’s opinion be negative regarding its return to the project. Nevertheless, the consortium’s intention is not to push matters to extremes, but to take over the project from where it was left off, with the agreement of new completion and delivery timelines. The legal opinion cites a number of factors, such as the agreed development model and the consortium’s ability to execute the project, concluding that the consortium’s return is consistent with the public interest. However, the legal opinion notes that the best outcome would be an agreement between the two sides.
The Ministry of Transport
From the Ministry of Transport’s side, what was made known to “K” is that the request for Kition Ocean Holdings to return to the Larnaca port redevelopment project was not submitted by the consortium as such, but by Panagiotis Alexandrou in the form of letters and a meeting with the Minister of Transport. In the letters, Mr Alexandrou argues that the state has the right to reinstate the consortium and re-award the project to it under the same terms under which it was originally awarded.
The question that arises and has been put to the Legal Service for guidance is whether it is possible to re-award the project to a consortium whose contract had previously been terminated.
The project
The redevelopment of the Larnaca marina and port is one of the largest development projects and, according to the original plans, was expected to generate approximately €12 million in revenue for the Republic and create four thousand jobs. Under the plan, the marina and port redevelopment would be completed in four phases over a 12-year horizon. It included the upgrading of existing buildings as well as the creation of 600 berths for leisure boats. The redevelopment was awarded to Kition Ocean Holdings in April 2022, during the presidency of Nicos Anastasiades. The failure to renew the €4.2 million guarantee was the final straw that led to the termination of the contract for breach of essential contractual terms. However, other issues had preceded this, such as delays in the commencement of works. The company had informed that it would start works in April 2023, receiving an extension until June 2024.
The project’s suitors
The consortium’s return and its efforts to regain the project contract come at a time when new procedures to restart the project are under way. With the government having found a channel of communication and understanding with local stakeholders in Larnaca regarding the project’s profile, the first decisive step is the completion and delivery of a study on the operational profile of the Port of Larnaca. The study has been assigned to Greece’s Hellenic Republic Asset Development Fund (former TAIPED), which is cooperating with a Dutch firm.
Completion of the study will bring the project back into a phase of renewed momentum. Interest in the project also appears to have been expressed by Qatar during the visit of Emir Tamim bin Hamad Al Thani to Cyprus in May 2024.
Read the original Greek article here.
