The announcement of the Ministry
File Photo .
Clarifications regarding the second phase of the development of the Larnaca and Paphos airports are provided by the Ministry of Finance.
This is the announcement
Recent statements by the Mayor of Paphos published in the daily press, as well as an announcement by the Audit Service of the Republic dated October 10, 2023, in relation to Phase 2 of the development of Larnaca and Paphos Airports, present facts in a fragmentary, incorrect and misleading manner, resulting in distort reality and create negative impressions. For this reason, the Ministry of Finance is obliged to repeat the relevant facts in an objective manner in order to properly inform the public.
The Mayor of Paphos appears to have stated that the reason why the additional construction works at Larnaca and Paphos Airports did not proceed is a previous “agreement” of the Ministry of Finance with the managing company for a time extension of the concession contract and satisfaction of the company's demands.
The Ministry of Finance officially declares that no “agreement” has been reached between the management company and the Ministry of Finance for a time extension of the concession contract and satisfaction of the company's demands.
The Concession Agreement includes milestones for the start of construction of Phase 2. The milestone regarding exceeding the capacity of Larnaca Airport was met in 2016. According to the provisions of the Concession Agreement, the milestone of the start of construction of Phase 2 was automatically activated for the Airport as well of Paphos. The management company applied for an expedited dispute resolution process with a request to proceed with improvement work at the airports and indefinitely postpone the construction of Phase 2. The adjudication panel rejected the company's request. The aforementioned decision, however, which was issued in 2021, does not oblige the company to construct the Phase 2 projects. For this reason, the Republic of Cyprus has initiated arbitration proceedings against the management company in order to oblige it, either to execute the relevant construction works of Phase 2, or to compensate the Republic of Cyprus accordingly.
The management company informed that it is unable to secure bank financing to carry out the construction work of Phase 2. In the context of the discussion between the two parties held during 2022, options were explored that could facilitate the company in finding bank financing for Phase 2 while , at the same time, in a holistic approach, they would lead to the resolution of the chronic pending issues (which still exist today) and concern the management company's claims against the Republic, which would be waived. Representatives of the Ministry of Finance, the Ministry of Transport, Communications and Works and the Legal Service of the Republic participated in the relevant discussions with the management company.
From the above, it is obvious that the delay in making the additional investments at Larnaca and Paphos Airports is not due to the so-called “agreement” since no agreement has been reached regarding the time extension of the contract and the simultaneous waiver of the management company's claims between the Ministry of Finance and the management company.
In any case, the expansion of the building facilities of Paphos Airport, to which the statements of the Mayor of Paphos and the announcement of the Audit Service are intended, were not included in the Concession Agreement.
However, during the discussions held on 2022 between the Ministries of Finance/Transport, Communications and Works and the management company, it was discussed how the expansion of the Paphos Airport terminal building is included in the additional investments of Phase 2 with the simultaneous removal of other works provided for in the Concession Agreement, as part of the agreement that will was concluded if and as long as the conditions under which the entire negotiation process took place were met.
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