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Kition's requests, the clear message from Vafeades and what the Audit Office has to say

The implementation of the grand integrated development of the marina and the port of Larnaca is progressing, albeit in the shadow of the demands raised by Kition Ocean Holdings essentially claiming deviations from the signed contract.

The government appears ready to consider any requests, but only after Kition first deposits the guarantee amounting to €4.2 million, as it agreed to do during last Monday's meeting at the Presidential Palace, under the President of the Republic Nikos Christodoulides. He government has, however, also clarified that the examination of any of the company’s requests will be carried out in accordance with the provisions of the contract and the law.

This, however, also comes at a time when the Audit Office has declared that discounts on the mandatory projects of the entire development cannot be given, and also that, at the same time, such a development would constitute an injustice against other companies that in the past implemented similar or roughly similar developments, keeping to the terms of their contract to the fullest and without receiving any preferential treatment, as it could be described.

On their side, the local bodies of Larnaca, such as the Municipality of Larnaca and the Larnaca Chamber of Commerce and Industry, have made it known that the necessary solutions must be found, in order for implementation of the project to proceed.

What is the company asking for?

Speaking to InBusinessNews , the Minister of Transport, Communications and Works, Alexis Vafeades, said that the company has submitted a list of requests, which once it has submitted the guarantee as stipulated in the contract, the Ministry has committed to examine.

Asked what the company is asking for, Vafeades said that the list of requests includes a series of projects. "For example," he added, "the company wants to build a residential block instead of a parking area."

"Also," he continued, "the company is asking that instead of expanding the marina now, it should be done at a later stage. Furthermore, it wants to start selling the residential developments before all the infrastructures are completed, while the agreement provides that in order to be able to sell residential developments, all the infrastructures must first be completed."

"We have told them that these requests must be given to the competent Committees, such as Central Committee on Changes and Claims, which will evaluate whether these requests can be satisfied through the contract," pointed out Alexis Vafeades.

According to the responsible Minister, the Government is looking at Kition's requests, "as we do with all projects, but unless the competent Committee examines them, as provided for in the contract, we cannot comment on whether something the company is asking for is feasible or not."

Regarding the position of the Audit Office, which is expressing reservations, Vafeades emphasized that "the Audit Ofifce has made some statements and considers that some things requested by the company cannot be done."

"To be honest, I have not seen any study by the competent Committees and therefore I have no reason to doubt what the Audit Ofifce says.I repeat, however, that the whole case must be run according to the procedures of the state. In other words, the request must be referred to the competent Committees, the competent Committees must meet, compare the requests with what the contract provides and accordingly give an opinion on whether something can be done or not," he clarified further.

The state will examine the company’s requests

"What I can assure you,” he stressed, is that the state will examine the company's requests in accordance with the provisions of the contract and the law. The state does not have any right or intention to circumvent these procedures. On the contrary, these procedures are there to serve the public interest and this is also our intention", pointed out Vafeades.

Asked to say whether he believes that based on the requests it submitted, the company is focusing on land development in order to have income during the execution of the projects, the Minister of Transport stated that "the company has not, at least officially, expressed to us the reasons it is asking for the changes, but surely it must have its reasons".

As he indicated, “the company has submitted a business plan, which, however, has not yet been evaluated and approved. When we get a chance to see that business plan, then we'll understand, based on the financial flow of the project, what its intentions might have been."

Responding to a related question, he said that "the business plan submitted by the company will be evaluated as soon as the contractor submits the guarantee, which I repeat, we are waiting for."

Also asked to say if he is optimistic that the works will start in June, the Transport Minister said: "What we are hearing from the market is that - and this is rumours, not something official - there was a tendering process from the contractor company. Now whether they have concluded it or not, I cannot know," he underlined.

"However, it is up to the contracting company to demonstrate, in practice, that it will keep its commitment to move the project forward by seeing contractors on site. If we don't see contractors, we can't be complacent that the project is progressing, as it should or should progress," Vafeades concluded.

The Audit Office’s intervention

Besides, speaking to InBusinessNews, Audit Office Spokesman, Marios Petrides, when asked about the changes requested by Kition, after clarifying that "we do not have a complete picture of the changes requested by the company," revealed that the Office sent a letter to Permanent Secretary of the Ministry of Transport, requesting information on a number of issues concerning the entire project.

According to Petrides, the Audit Office has requested:

  • A description of the project and the value of the execution of mandatory and non-mandatory projects.
  • The main contractual dates.
  • Date of commencement of work in practice.
  • A brief description and value of work performed to date.
  • The contractor's contractual obligation to provide bank guarantees (types, duration and amount).
  • The date of submission and renewal of bank guarantees and report of any outstandings.
  • A description of the contractor's requirements for changes to the works to be performed.
  • The measures and actions of the Ministry of Transport for the contractor's compliance with its contractual obligations.
  • The reasons why the tender for the project's independent engineer has not been re-announced.

As he said, the Ministry of Transport should respond to the above by Friday, 19 April in order for the Audit Office to proceed with checks and issue a relevant report.

"We will issue a report and depending on the developments, we will probably see it towards the end of the year. Until then, Parliament’s Development Plans and Public Expenditure Control Committee will be kept informed of the data we will have in front of us," he added, finally stressing that "discounts on mandatory projects cannot be made. This is our clear position."

However, it is worth mentioning that, in relation to the letter from the Audit Office, the Minister of Transport emphasised to InBusinessNews that "we will respond to the request of the Audit Office, within the schedule that has been set".

"For us, I must say that the audits carried out by the Audit Office provide us with guidance and assistance in the management of the projects being carried out. The Audit Office's audits are welcome because it helps us do our job better," he clarified.

Larnaca Municipality and Chamber of Commerce and Industry anxiously waiting

It is noted that the developments surrounding the unified development of the port and marina of Larnaca are being closely monitored by the city's agencies, stressing that the project must be implemented.

In his statements to InBusiness, the Mayor of Larnaca, Andreas Vyras, said that "we are waiting for an update from the Ministry on the next steps and the changes requested by the company".

"We emphasizsd to the Ministry that it must be ensured that all the projects provided for in the agreement will be carried out and that the projects must start in June," he added, repeating that "we expect information from the Ministry if there is or will be any variation."

The Mayor of Larnaca explained, at the same time, that "we will closely monitor the issue, as we have done until today, and where and where we need to intervene, because under no circumstances do we want there to be delays in the implementation of the project", warning that "if the projects for the marina and the port of Larnaca do not proceed, we will strongly react."

On his part, the Director of Larnaca Chamber of Commerce and Industry, Charalambos Andreou, speaking to InBusinessNews, said he did not know if there had been any meeting between the Government and the company to discuss the changes requested by Kition.

"Our position as the Chamber is that the project must finally be implemented, either one way or the other. And this other way will have to be found by the state, because we will be held hostage if the project is not implemented," he added, stressing that "the state, somehow, together with the company, must find a solution.”

Asked if the Chamber was concerned about any delays in the implementation of the project, Andreou said that "the information we have is that the works will start in June, but so far we do not see any substantial movement, and that is something that is of concern to us."

"After the meeting at the Presidential Palace, as a Chamber, we await the development of the issue. We are closely monitoring the developments and are waiting to see what will happen," he concluded.

(Source: InBusinessNews)

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