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27 May, 2024
 
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Kition Ocean Holdings accused of delaying Larnaca port upgrade

Legal opinion points to contract violations in Larnaca port project

Apostolis Tomaras

Apostolis Tomaras

Stagnation has been observed on the government and company front regarding the redevelopment of the port and marina in Larnaca. The situation remains unchanged, according to sources familiar with the events, but there is an uneasy calm that could escalate at any moment.

Kition Ocean Holdings, despite its public declarations to launch construction projects, continues to maintain a confrontational stance with the Ministry of Transport, fuelling concerns that the project is heading towards failure. These concerns are reinforced by a legal opinion requested by the Ministry of Transport, which reportedly identifies serious contractual violations by Kition Ocean Holdings that could lead to the termination of the contract.

The prevailing sentiment within the government is that the contractor's intentions do not align with executing the project. Larnaca authorities are anxious about the project's fate, openly expressing their concerns.

The legal opinion

The Department of Transport sought advice from the Legal Service following Kition Ocean Holdings' reluctance to renew one of the three letters of guarantee and the public conflict. The opinion, now with Transport Minister Alexis Vafeadis, addresses all raised questions. The Ministry of Transport and relevant services are currently considering their next moves. Sources indicated that while consultations are ongoing, no definitive decision has been made on the government's course of action. The Legal Service concurs that failing to renew a letter of guarantee is a serious contractual breach by Kition Ocean Holdings, potentially leading to contract termination.

Concerns over Larnaca port

The first signs of trouble at Larnaca port emerged when the contractor failed to renew one of three guarantees worth €10 million. President Nikos Christodoulides intervened, and it appeared both parties had reached a consensus for the project to commence next month. However, the company later accused the Ministry of Transport of not honouring the agreement. According to the contract, redevelopment cannot start unless the entire guarantee is in force, and this omission constitutes a breach by the company. Kition Ocean Holdings initially accepted the €10 million guarantee but later proposed reducing it to €4.2 million. At a presidential meeting, the government insisted on restoring the original guarantee amount and suggested both parties resolve the dispute through further discussions while addressing additional issues raised by the contractor.

Kition Ocean Holdings' stance

The contractor initially agreed to this roadmap but then claimed different terms were agreed upon during the presidential meeting. The company is reportedly prepared to restore the guarantee to €4.2 million but seeks commitments from the state on how quickly it will respond to other demands. Government sources believe the company is effectively placing conditions on an obligation already stipulated in the contract.

Permit issues

Compounding the issue of the guarantee, there are also problems related to permits for the Larnaca port redevelopment. Despite being notified, Kition Ocean Holdings has not collected the licences issued by the relevant government departments. Although there is no time limit for collecting the licences, this delay exacerbates the tense situation. Sources informed "K" that the company has been told the licences are ready and that it needs to pay hundreds of thousands of euros to obtain them.

[This article was translated from its Greek original]

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Cyprus  |  Larnaca  |  government  |  economy

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