A Country in Crisis – Cyprus
In 2012 Cyprus entered a major debt crisis. The EU (European Union) conditioned their extended emergency funds on the Cypriot Government to improve key assets as part of the earn out process.
As an Island, Cyprus’s port sector is critical to their economic success, however for the past 50 years it has been underperforming. Costs were high and lacked transparency. Inappropriate and needless infrastructure had been invested into by the Port Authority and the Government. To enable Cyprus to catch up and compete with other regional players investments in tugs, new container cranes, and information technology were urgently required.
Major success was had for the Cypriot Government in the commercialisation of Limassol Port in the “earn out” program, which they exited earlier than scheduled. The islands economic performance and financial contributions to reduce the debt burden improved.
Getting it done – The mechanics
The operation of the port had to be “cleaned”: legacy leases (licenses), historic non-contractual arrangements, and regulatory capacity/capability needed development.
To be transparent and fit new commercial arrangements the tariff book needed to be re-written.
Laws needed to change and a new set of “Cyprus Port Authority” regulations prepared.
Management of parliamentary enquires, EU bureaucrats and the Troika overseeing the rescue of Cypress port needed to happen.
In line with the reforms 3 major concession tender processes needed to be run in parallel. In line with the EU Procurement Rules the over 30 bidders had to be managed.
Seaport’s Contribution
Seaport Asia developed and implements the strategy. A market orientated plan was developed and executed that removed ineffective legacy arrangements for cargo handling and replaced them with:
In 2014, KPMG valued the port assets at Limassol, the main port in Cyprus at € 350m, the Seaport restructuring saw the companies to whom the ports were sold valuing them at over € 1,900m as the deal closed in April 2016
Limassol port was recognised in 2016 as the best privatisation deal of 2016 by receiving the World Finance Award by World Finance magazine.
