Limassol port has lost business in the four years since it was privatised, due to higher rates and competition from rival destinations, the owner and regulator told parliament this week with Opposition AKEL blasting the government for selling national assets.
The Transport Ministry refuted these claims, saying the state has so far earned some €200 mln in concession revenues, nearly double from the previous four-year period while the private operators have invested a further €50 mln to make it more competitive.
Petros Krassas, chairman of the Cyprus Ports Authority, said: “Before the commercialisation of Limassol, there were competitive prices, (but) now we are having a hard time because we are more expensive than surrounding ports, such as Egypt.”
Krassas said from 2014, transit trade at Limassol port was on an upward trend, which was arrested and declined after the island’s main commercial port of entry started operating in February 2017 as DP World Limassol.
He said the number of containers were 17,077 20-foot equivalent TEUs in 2014, rose to 26,476 TEUs in 2015 and 45,922 in 2016.
However, in 2017 it dropped to 19,368 TEUs, further to 6,245 in 2018 and 2,813 in 2019, for an accumulated volume loss of 94% in three years while amid the coronavirus pandemic in 2020 it picked up slightly to 4,197 TEUs.
After competitive bids were received in late 2015, the selected concession holders Eurogate and DP World agreed to pay €1.9 bln over the 25-year management period.
The concession agreement had been a compromise from the government’s initial plan to fully privatise the port and generate much-needed revenue from the sale of underutilised assets, such as telecoms Cyta and electricity utility EAC.
The Cyprus Ports Authority remained as landlord and regulator of port services.
“The commercialisation of Limassol port is an ambitious project which will bring significant benefits to our country,” the Transport Ministry said at the time.
“It is a project of strategic importance as, not only will it improve the competitiveness of the port over the next decades, but it will also contribute to the further revival of the economy and increase on the rates of growth,” it concluded.
The consortium of Eurogate International GmbH (majority participant), Interorient Navigation Co. Ltd and East Med Holdings S.A received the concession for the container terminal, and the consortium of DP World Ltd (majority participant) and G.A.P Vassilopoulos Public Ltd received two separate concessions for the operation of marine services (with P&O Maritime) and the multi-purpose terminal.
High price, increased charges
AKEL spokesperson Stephanos Stephanou said during this week’s parliamentary committee hearing that “when the Democratic Rally government was scheming the privatisation of the port it claimed that it would become more competitive.
“Nevertheless, their results have been refuted, as the port of Limassol has become more expensive and less competitive. Companies and industries pay a very high price, due to increased charges.”
Stephanou said that the evidence confirms the government made a bad deal in the sell-off to the detriment of the economy and society.
He said it has been proven once again that privatisations are detrimental to the country. For this reason, he added, AKEL will continue to oppose the efforts of the DISY government to sell off national assets.
In its response, the Transport Ministry said the economy, and society have benefited from the commercialisation of Limassol port.
It said overall trade through Limassol port has increased in recent years, as well as revenues, with the state earning €201.6 mln since 2017, while from 2012-2016 revenues were €116.5 mln.
The ministry argued the three concession companies have invested “significant capital” close to €50 mln, to improve services in the port through software systems, the installation of security systems, investments in new equipment, upgrading existing equipment, staff training, maintenance and upgrading infrastructure.
It said port charges were “complex, non-transparent and had many distortions.”
New legislation was approved by parliament that simplified charges and introduced a universal tariff system, similar practice to other ports.
“On average, the charges remain the same while for some products it may have been higher, but this represented a minority,” the ministry said, adding that rebates were offered during the first three-year period to compensate for higher rates.
“Since January 2020, the Ministry is in consultation with the operator to find a solution that does not create problems of distortion of competition and state aid.
“At the beginning of 2021, the Ministry invited a tender for consultants to examine all non-regulated charges.”
The ministry said anchorage fees are regulated and have a ceiling, which is why other ports of call, such as Moni and Larnaca, are competitive, as is the case of the warm lay-ups for cruise ships near Moni.
It noted that Limassol port is now available on a 24-hour basis, including weekends and the average service time for container vessels has been reduced to 18 minutes.