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22 May, 2024
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Larnaca port echoes Vasilikos unrest

President intervenes in contractor agreement

Apostolis Tomaras

Apostolis Tomaras

The ambitious redevelopment of Larnaca's port, a cornerstone of the city's growth, has hit a rough patch. Following the well-known issues with the Vassilikos terminal consortium, troubles have surfaced with the contractor tasked with revitalizing Larnaca's port and marina. This development has sparked significant concerns regarding the contracts signed for both the Vassilikos project and Larnaca's port.

The government has accused the project's contractor of breaching contract terms, leading the company to take legal action against the Republic of Cyprus. Naturally, this has raised doubts about the project's construction timeline. Meanwhile, Mayor Andreas Vyras is sounding the alarm, urging both parties to find a resolution to prevent jeopardizing a project vital for Larnaca and its surrounding region.

Vyras remains hopeful, suggesting that construction could kick off in June, with expectations pinned on President Nikos Christodoulides' intervention to navigate the existing obstacles.

On the governmental front, the latest standoff with yet another major project's contractor stems from the company's decision not to renew a €10 million performance bond. According to the project's contract, the contractor, Kition Ocean Holdings, is obligated to maintain three such bonds.

However, one of these expired on January 31 without renewal, prompting the Ministry of Transport to notify the company of potential legal ramifications. Moreover, certain contract clauses have further complicated matters, suggesting that the failure to renew one bond could activate others.

Pending the President's discussion with the contractor, concession terms allow for contract termination in cases of severe breaches. Additionally, the government alleges that the company's reluctance to renew the contract may be linked to financial troubles facing its parent company, Aroundtown.

In response, the project's company vehemently denies any liquidity issues and proposes contract term modifications citing geopolitical conditions. While the government is open to dialogue with the company, it emphasizes the necessity of first renewing the expired bond. Transport Minister Alexis Vafeiadis has made it clear that discussions cannot proceed without the bond and has indicated a willingness to seek legal counsel if necessary.

The legal maneuver by Kition Ocean Holdings has rattled local authorities in Larnaca. Mayor Andreas Vyras stresses the importance of resolving such issues outside the courtroom, characterizing it as a complaint against the project's company. Vyras calls on the government to carefully evaluate the company's demands to ensure they do not undermine the project's progress.

Encouraged by the prospect of overcoming obstacles, especially with the President's intervention, Vyras underscores the significance of the project for Larnaca's future. He urges the contracting company to uphold its obligations, dispelling notions of financial instability within its parent company, Aroundtown. With the port and marina redevelopment project in Larnaca representing an investment of €1.2 billion, the stakes could not be higher.

[This article was translated from its Greek original]


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