Commercialization of Limassol Port, Ministry of Transport says 

Commercialization of Limassol Port, Ministry of Transport says 

Nicosia, January 15, 2016/Independent Balkan News Agency

Commercialization of Limassol Port on-track and expected to be completed by the end of the first quarter of 2016, Ministry of Transport says in a statement.

After a successful launch of the tender and an intensive round of due diligence and consultations with the port operator candidates, this milestone 2015 project remains on track, in line with the original timeline set by the Ministry of Transport, Communications and Works, the Ministry said in a press release.

The Ministry notes that the commercialization of the Port of Limassol is a project that offers significant benefits to the Cypriot economy, as well as the Cypriot consumer and taxpayer; a project that represents a unique opportunity for Cyprus to modernize its main port and transform it into a strategic and efficient transportation hub in the Mediterranean, a true symbol of Cyprus` economic growth.

The key objective, it adds, of the project remains threefold: (i) the modernization of the Port of Limassol through investments in equipment and systems, and the adoption of the best international practices, both in terms of service levels, as well as health & safety standards; (ii) the value added to the economy, through a combination of a transparent tariff system and efficient operation resulting in cost improvements and reductions; (iii) the continued and uninterrupted operation of the Port.

According to the release, the port’s commercialization has multiple financial benefits, namely (a) an up-front fee; (b) a steady annual income for the State in the form of a percentage of the revenue of the operators with a minimum fixed payment, allowing it to participate fully in any upside the port has; (c) the transfer of the capex & opex investment responsibility to the operators, (d) tax revenues from the operating companies, and added employment likely to come as a result of the increase in port activity. Finally, the State retains ownership of its strategic port infrastructure as it only grants the operating activities.

Concerning the project`s process, the release notes that during 2015, the overall progress was in line with the objectives set by the Ministry and the Advisory Team. The commercialization project remains on track and is subject to a rigorous and transparent process. The plan is to have the Preferred Bidders before the end of the first quarter of 2016, in line with the process so far.

The pre-qualification process – common for all candidates- was exhaustive and focused on operating experience, financial robustness and scale of operations. All parties that pre-qualified are professional operators, financially sound, and with significant and relevant experience in the port industry.

Furthermore, as part of the process to upgrade port operations, the Cyprus Ports Authority has introduced a new tariff framework for all commercial services. This new tariff framework will apply from the date that the operators will take over the operation of the Port.   Based on transparency and simplicity, the new framework aims to promote both the operational efficiency, as well as the competitiveness of the Limassol Port, bringing it closer to competition and the international market practice.

Under the new scheme there are fewer tariff categories, and the pricing mechanism is simplified as charges are unified under aggregated tariffs. Contrary to the current system, which has many different tariffs and cost elements, the new tariff framework is simple and transparent. This is expected to decrease the cost of doing business at the Port.

The charging structure is re-designed, so as to maximize the value of the infrastructure, including the port facilities and equipment. This means better value-for-money and greater operating flexibility.

What is more, it has been ensured that total tariffs under the new system will not increase, while at the same time the new Operators will have to apply a balancing mechanism for three years, which will ensure smooth transition towards the new tariff regime.

Finally, the transformation of CPA – from port owner and operator to a modern landlord and independent regulator, based on the current EU standards, is also well under process. The restructuring is progressing according to plan and several meetings have already taken place with the employee representatives to address their concerns.

Finally a revised regulatory framework, to safeguard the operations of the port under the concessionaires, has been completed and the CPA will proceed in the next few weeks with the final administrative requirements to get this formalized.

Source: CNA