THE PROPOSED €600m Chinese investment at the old Larnaca airport appears to have hit a number of economic and legal snags which will be discussed today at a key meeting between representatives of the state, the company and Hermes Airports.
Communications Minister Efthymios Flourentzos has acknowledged that the proposal from Chinese-interest company Far Eastern Phoenix (FEP) to extend its original 19-year agreement with Hermes Airports for a further 31 years with the state is causing a few problems.
“Initially, the procedure was somewhat different because at first, the government’s approval was sought for a 19-year deal between Hermes and the company. The approval was not given because in the meantime, after letters were exchanged about the Chinese company, their interest in a 50-year contract was made known,” he said.
This changed the landscape entirely, he noted, which is why the government set up an ad hoc committee within the ministry and a ministerial committee to examine the proposal.
FEP proposes to transform the old airport into a commercial centre with a showroom and bonded facilities for Chinese factories to display products.
The Chinese investors want to extend a preliminary agreement with Hermes to hire the space for 19 years, after which Hermes’ concession agreement expires, for a further 30 years with the state before committing to the large investment.
A meeting between a company representative, Hermes and the Attorney-general Petros Clerides will take place today to further clarify economic and legal aspects of the proposed project, which is expected to create new jobs and bring much-needed investment to the country.
Flourentzos said the focus now was on examining the economic advantages of the proposal, which if substantial would provide the necessary stimulus to overcome any legal obstacles.
“If we judge that the economic aspect is beneficial, we will see what legal procedures need to be followed to have a legally-sound process,” he said.
The minister said the government needed further clarification on the status and number of workers who will be brought to Cyprus (most likely from China), the size of the final investment and how it will be invested.
According to yesterday’s Phileleftheros, the relevant authorities charged with examining the proposal have identified a number of obstacles to its fruition, questioning the legality of the procedure followed by Hermes, and of the state extending the preliminary contract with the company.
Other problems reportedly raised include the commercial viability of the project, the financial viability of the company and migration and employment issues regarding the huge number of foreign workers that may be brought to Cyprus.
Why build a large commercial centre in Cyprus. Nobody has any money to spend there.
Assume the legal problems were that it still has no title deeds?