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With the announcement this week that the state will go to tender to seek up to three strategic investors to undertake the management of Limassol port, the process has finally begun for the government to deleverage its assets and implement the “smaller-is-better government” policy.
With the new operators expected to take over the island’s biggest port some time after the first quarter of next year, the Cyprus Ports Authority will become a landlord and regulator, effectively controlling the rates charged for cargo and cruise passenger traffic and ensuring that the state enjoys higher annual revenues than the 20-25 mln euros it earns at present.
With the Vassiliko port already in private hands, handling the cement factory and now supervising the nearby oil storage terminal, and with negotiations expected to conclude this month with the Zenon consortium for the management of Larnaca port and marina, the CPA will cease to have any other role apart from supervising the licensors.
This means that 2016 will be a good year for government revenues, both in terms of license fees, but also because of an anticipated increase in passenger and cargo arrivals, as well as avoidance of waste, often the case when having to do with inefficient government-operated enterprises.
With efficiencies being introduced and new systems installed for more productive output, as all private operators need a solid return on investment, costs are also expected to come down, making Cyprus ports competitive once again, with greater benefits for the future.
Next is the break-up and privatisation of both telco Cyta and power producer EAC, with the most obvious changes being the separation of the network and grid provider from the consumer services, while other assets are also up for sale as part of the bailout conditions agreed with the Troika of international investors. The Post Office is already on a path of modernisation and other state-owned non-core assets will be sold, as soon as market prices allow.
The casino project has stalled and is taking its time for unknown reasons, and natural gas revenues will not start rolling in until after the end of the decade. Thus, the “pro-business” administration will have to proceed with all the above changes to prove its mettle and start delivering on promises of reform with a real impact felt by the ordinary people on the street.
