OFFICIALS negotiating with the preferred bidder for the island’s new airport programme have set early June as a cut-off point for talks, lead negotiator Lazaros Savvides said yesterday.
Savvides, who is permanent secretary of the Justice Ministry and acting permanent secretary of the Interior Ministry, was responding to reports that the negotiations with Alterra, which opened in January, had run into trouble.
The £200 million Build-Operate-Transfer (BOT) project to build a new airport in Larnaca and upgrading the one in Paphos is already almost a year behind schedule and construction is nowhere near starting until the government manages to reach a deal with Alterra or move on to the second preferred bidder, Hermes Consortium.
Reports yesterday suggested Alterra had expressed concern that the possible opening of Tymbou airport in the north would reduce traffic to Larnaca, affecting the operator’s revenue.
There are also other problems as far as fees and charges to be imposed are concerned, the report said, adding that the Civil Aviation Authority, which runs the airports, had failed to pay current suppliers, intending to leave those contracts to the new operators.
Savvides admitted there were certain concerns being expressed in the negotiations but insisted this was normal.
“As far as I know, and I happen to know, the negotiations are going fine,” he told the Cyprus Mail. “You can’t expect the two sides to agree at the first go.”
However, Savvides did concede that the negotiations were behind schedule since former Communications and Works Minister Kikis Kazamias had fixed the end of March at latest for the signing of the contract.
“There is a slight delay, but the negotiations are taking place in good spirits and I am sure we are going to find a convergence of views,” he said.
A new round of intensive talks is to begin today, which could stretch into the weekend in an attempt to iron out the difficulties by the end of this month.
Savvides admitted Alterra was concerned about the Tymbou issue but said the topic had been raised in the tender documents because at the time the Annan plan was being discussed and provision was made for the reopening of the airport in the north.
Savvides said he would brief new Communications Minister Haris Thrassou, who takes office today, on the negotiations to date with Alterra.
He also said that if the government and Alterra failed to reach an agreement by the end of May or the latest by early June, he would prepare a report for the minister, who could then decide whether to continue talking to Alterra or move on to the second preferred bidder.
“It will be up to him whether to decide to go on with the negotiations,” Savvides said.
Sources close to the negotiations told the Cyprus Mail that Tymbou was an issue for Alterra but not a major one. “Until the negotiations are concluded everything is an issue,” he said.
An Alterra spokesman said the objective was to conclude the negotiations as soon as possible.
Alterra, a consortium with British interests, was named as the preferred bidder for the 25-year BOT contract last November. Its bid included an offer to return to the Cyprus government 48.96 per cent annual gross turnover in royalties under contract, compared to 33 per cent offered by the Hermes Consortium and 20.21 per cent promised by the Cyprus Airports Group, led by local construction giant J&P.
If negotiations with Alterra flounder, the government will open talks with the Hermes consortium.
Because of its low offer, coupled with a clause in the tenders’ criteria, the J&P consortium was specifically excluded from opening any negotiations with the government in the event that talks with the other two bidders fell through.
