articles | 04 January 2016

Benefits of COSCO control of Limassol port

Should Chinese shipping company COSCO be successful in getting the concession of Cyprus' Limassol port, it would help promote the 'Belt and Road' Initiative, according to leading economics professor, Sofronis Clerides.

"If COSCO is successful in getting the concession, it will be a first class opportunity to promote the Belt and Road Initiative. The proximity of Cyprus to the widened Suez Canal can help in promoting the target of reviving the old maritime silk routes," Sofronis Clerides, professor at the economics department of the University of Cyprus, said in an interview with Xinhua.

Clerides said that given the extent of the economic crisis, the economic recovery of the eastern Mediterranean island after the 2013 bailout has been beyond the projections of international lenders.

He said that among tasks which have to be tackled is the completion of reforms of the public sector, including the privatisation of state-owned assets, primarily the Limassol port and Cyprus' telecommunication company.

Privatisation of the port and telecommunication sectors were among the requirements laid down by international lenders when they offered Cyprus a €10-billion bailout in March 2013.

International lenders had estimated that the privatisation of state-owned assets would fetch about €1.4 billion, which would go towards lowering the sovereign debt, now standing at close to 109% of the country's €17.5 billion annual economy.

"What privatisations will actually fetch is a matter of conjecture as telecommunications is a constantly developing sector and the part of the pie belonging to the state-owned Cyprus Telecommunications Authority is constantly changing," he said.

Clerides' view is that the government does not absolutely need the revenue from privatisations, given the better-than-expected performance of the economy, which is projected to mark a growth of 1.8% this year after four years in the red.

"Privatisation of state-owned operations is rather needed to make them more productive and also to lower the risk of corruption and political interference in their management," said Clerides.

He said the government had managed to promote privatisation of the port operations rather easily due to the success story of the Piraeus port in Greece where COSCO had been running part of port operation successfully.

COSCO was among about 10 foreign companies which were short-listed for the container operations at the Cypriot port of Limassol, with about 20 others competing to run two other sections of the port.

Clerides said foreign investors in port operations would not run any risks, apart from the customary business risk of investing in Cyprus.

"The island has a stable and reliable legal system, it has been an established centre for offshore companies for a long time and has reliable communications and financial services. It is also home to some of the biggest shipping management companies, itself being the third EU country in terms of tonnage of Cypriot-registered ships," said Clerides.

Successful bidders for the three different sections of the port operations are expected to be announced in March 2016.

Source: Famagusta Gazette

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