Limassol: The biggest energy storage and management project of oil build in recent years in the Mediterranean and just completed last November in Port of Vasilikos is in danger of becoming unsustainable due to competition from Malta’s port. The fact that forced the ministerial Council in front very serious possibility of losing significant revenue for the state, estimated at € 20 million annually, to approve at its last session the proposal submitted to the Minister of Communications and Works, Marios Demetriades, for changes in the contract with the managing company VTT Vasiliko Ltd which, noting, made an investment of around € 300 million at the Port.
With the amendments to be made to the contract and the legislation the House will vote, power will be provided to the board of Port Authority to reduce charging fees
to service ships that load and unload oil products.
In particular, in February 2012, the Port Authority signed an agreement lasting 28 years with the company VTT Vasiliko Ltd for the construction, operation and use of terminal and jetty at Port of , for loading, unloading and storage of hydrocarbon products. This investment is in the order of € 300 million, money that was paid entirely by the company. The terminal consists of 28 tanks of 543 000 cubic meters and boasts pier about 1.5 km offshore, with four tanker mooring points. Construction of the project was a joint venture company J&P.
As specified in the information note submitted to the Council of Ministers on 03.16.2015, the Minister of Communications and Works, Marios Demetriades, after the launch of the pier, which was the end of November 2014, the company VTT Vasiliko Ltd made representations to the Ports Authority, stating that the port of Malta, where relevant-competitive activities are made, the competent authorities of the country have made significant reductions in their charges relating to service ships that load and unload hydrocarbon products, following the information received regarding the construction of the said wharf in Cyprus.
As stated in his note, Mr Demetriades, “despite the fact that the agreement was implemented before about eight months, these exogenous and unpredictable factors, make the activity of VTTV unsustainable, risking the loss of substantial revenue for Ports Authority and hence for the state.
Therefore, despite the fact that the agreement recently was launched and it is wrong to make someone changes affecting the economic aspect, however, because the reduction of prices in competitive port of Malta is something that escapes the control of both contracting (Authority Ports-VTTV) and at the same time affect the sustainability of growth and revenue of Ports Authority considered that the public interest, it should be flexibility in terms Ports Authority so that it can be differentiates these charges related hydrocarbons having result Cypriot ports for that matter, to be attractive and be able to compete with neighbouring ports”.
According to Mr Dimitriadis, this differentiation should be accompanied by other provisions to ensure, as far as possible, the same revenue yield ratios (for VTTV-CPA) to those comprising the initial agreement with a time horizon of 28 years in duration.
“Green light” from the Cabinet
The Cabinet approved the proposal of the Minister of Communications and Works Marios Demetriades and lit so the green light to start the amendment procedures and the relevant regulations governing the rights payable Ports Authority. The House will vote a new welfare / Subject to these regulations, according to which in the case of hydrocarbons, the board of the Port Authority has the power to determine, depending on the individual performances, the billing rate.
Source: philenews.com
Translate by: Andreas Vryonides CyprusGasNews Oil & Gas Energy Analyst / M.B.A Oil & Gas Management
