THE GOVERNMENT yesterday finally signed the agreement for the upgrade and running of the island’s two airports, even as the deal came under the scrutiny of the European Commission and was contested in Cypriot courts.
Embattled Communications and Works Minister Thrasou yesterday put his signature on the agreement, co-signed by Nicos Shacolas for the Hermes consortium, awarded the 500 million euro contract.
It is the by far the largest construction contract ever entered into by the state. The government says it expects to generate some £2 billion over a 25-year period, after which Hermes will return the operation of the airports to the state.
Under the deal, Hermes will build a specified number of add-ons to the airport buildings; collectively, the project is designed to modernise the Larnaca and Paphos terminals and enable them to handle 6 million in passenger traffic.
The upgrade works at Larnaca will take about four years to complete, and those at Paphos will take three.
But from the outset, the government’s plans were shrouded in controversy. Talks with the initial successful bidder, the Alterra/Cybarco consortium, broke down last summer, and the contract was later awarded by default to the next in line bidder, Hermes.
Then recently two of the rejected bidders claimed irregularities in the tender process, with one of the disgruntled consortiums trying to freeze the signing of the agreement. A motion by Alterra/Cybarco for an interim order to put the agreement on hold while its allegations were being investigated was this week rejected by the Tenders Review Authority.
For the government, which doggedly refused to scrap the agreement, the decision by the Tenders Review Authority effectively signalled the overcoming of the last hurdle. The administration’s rush to seal the deal was understandable: the European Commission was making inquiries into faulty negotiations procedures, and meanwhile Hermes was growing impatient.
Earlier this week, Thrasou said Hermes had warned that if the government delayed in signing they would seek re-negotiation of the contract as prices on fuel, asphalt and cement have risen while the banks are waiting to release £500 million currently on hold.
Renegotiating the deal would be unthinkable, Thrasou added, because it would take eight more years for the project to come to fruition. The implication was that, faced with this pressure, the government was acting in the public’s best interests.
Thrasou personally took flak from the media in the past few months, after promises that the “deal is almost done” repeatedly failed to materialise, leading to speculation that something was amiss in the negotiations with Hermes. As Thrasou told the Cyprus Mail, “I am the first one to want this agreement to be over and done with.”
But any hopes the government may have had that all would be rosy from now on were dashed yesterday: immediately following the signing of the deal, all airport staff (except air traffic controllers) went on a wildcat strike, causing mayhem at the two airports. Employees say that their terms of employment under Hermes’ management are not guaranteed.
