Cyprus Cancels $1.3 Billion Larnaca Port Deal Amid Legal Dispute

The Cypriot government has annulled a 1.2 billion euro ($1.30 billion) concession agreement with Kition Ocean Holdings for the development of Larnaca port, citing a breach of contract. The agreement, initially signed in 2020, aimed to transform the southern port town into a hub for both yachting and commercial activities.

Why this matters: The cancellation of the port concession deal has significant implications for Cyprus' economy and infrastructure development. The resolution of this conflict will be critical in determining the future trajectory of Larnaca port and its role in international trade and aid.

Transport Minister Alexis Vafeades announced the cancellation on May 27, 2024, stating that Kition Ocean Holdings failed to renew a vital index letter of guarantee, which is considered a significant contractual breach. This failure has resulted in the port and marina reverting to state administration.

The decision has sparked a public dispute, with Kition Ocean Holdings arguing that the government's move coincides with separate legal proceedings initiated by the company. "We applied to the court two months ago to force the Government to follow their own agreement and to meet and solve the disputes in line with the agreement," the company stated.

Despite the legal wrangling, government officials have assured that the cancellation will not disrupt operations at the port, which serves as a vital staging post for international aid into Gaza. "This effectively activates a process where the port and the marina... are reverting to the administration of the state," Vafeades said.

The Larnaca port project was a significant investment for Cyprus, intended to boost the local economy and enhance maritime infrastructure. The government's commitment to the project's completion remains steadfast, with alternative methods being explored to move forward.

The Ministry of Transport is currently assessing the next steps and has scheduled a meeting with Larnaca Mayor Andreas Vyras and the local community to discuss the project's future. "Our commitment is that the project will be implemented... alternative methods will be explored to move forward," Vafeades emphasized.

The legal dispute unfolds, the focus remains on ensuring that the port's operations continue seamlessly and that the development plans are realized, albeit through different avenues. The resolution of this conflict will be critical in determining the future trajectory of Larnaca port.

Key Takeaways

• Cyprus cancels $1.3 billion Larnaca port concession deal with Kition Ocean Holdings.
• Breach of contract cited as reason for cancellation.
• Port and marina revert to state administration.
• Government assures no disruption to port operations, including aid to Gaza.
• Alternative methods to be explored to complete the project.