What can you tell us about the privatization of the Limassol Port?

We prefer to call it commercialization. We believe this better reflects what we are going to do with the Port of Limassol. As the Ministry of Transport, Communications and Works, we are the ministry that has constructed most of the projects in Cyprus. Since we have completed previous commercialization projects like the airports, since we have this experience, we decided we could go alone as a ministry for the commercialization of Limassol Port. We know the process. We have done it in the past. The commercialization of Limassol Port is something very important for us at this moment. We believe that through this commercialization, there will be an opportunity to change how we are doing business in the Port of Limassol to make it more contemporary, more competitive, and more efficient. We believe that the development we are going to have with the port is something that will positively affect the development of the Cyprus economy as well. Cyprus is a small island, a small country. The development of its ports influences very positively the development of the economy of the whole country. We are coming out of a crisis our people have suffered for a long time now. We continue to suffer. There are people who face big problems. They continue to face problems. We are optimistic that now we are coming out of this crisis. Especially with the implementation of some of the development works, we are going to help our economy grow again and slowly, through certain positive percentages of development, we believe we are going to regain what we lost in the last five to six years, to regain the confidence of all other partners in the world. Especially to regain the confidence of the markets and the banks. As a country, we are famous for having and providing very good services. We used to provide very good services. We lost these and we lost our credibility because of what happened in 2013. We do not want to go back. We do not want to seek responsibility for who has done what. We are very focused on what we should do in order to develop our economy. We need to continue the reforms we have decided on with Troika. We need to continue working hard in order to implement as many projects as we can. We need to take advantage of any funds from the EU that we can use for the development of different projects we have in mind. I always say that by hard work we are going to regain this trust of the banks and markets. I am very happy because I see that we are on the right track. We are regaining what we lost in the last six years.

If I can come back to the commercialization of the ports, is Cyprus looking to become some sort of a shipping hub?

Yes. We are seeking to become something like that. Let me explain the use of the term commercialization instead of privatization. Privatization is a word that carries the selling of assets. This is going to be a concession. We are not selling any assets from Cyprus Port Authority. We are just giving a long-term license of twenty-five years to some investors to come in and operate the port for this period. After this period, everything comes back to the Cyprus Port Authority. We are not losing any assets. That is why we prefer the term commercialization. As you know, Cyprus has a very strong position in shipping. The Cyprus fleet is the third in Europe and the tenth worldwide. Since we are very strong in shipping, we want to explore our ports and get a similar position for our ports as well. This means that we need to further explore and exploit the position of Cyprus, which is one of the first countries that a ship finds once it crosses the Suez Canal. A ship coming from Asia crosses the Suez Canal. In front of them are Cyprus and the Limassol Port. Unfortunately for our neighboring countries, there are a lot of conflicts. This is something that gives an advantage to our ports. Cyprus is a safe place. A lot of companies would prefer to use a Cypriot port as an intermediate stop. We wish for peace in our neighboring countries because it pays everybody in the region. Cyprus used to be and will be a safe place for everybody. We believe that with the widening of the Suez Canal, a lot more ships will use the Suez Canal. We know that today the center of gravity of development is in Asia. They are looking westward. They know that all their products will be sold in Western Europe and America. A lot of these ships carrying goods from Asia will pass through the Suez Canal, as will a lot of ships that export from Western Europe or the United States to Asia. This is a commercial access that carries a lot of ships and freight. We have the north-south access from the Black Sea to southern countries. Cyprus and Limassol Port are near this access point. We believe that commercialization of Limassol Port will give us the opportunity to put the port along this access. If the new operator is a company that carries containers or freight on this access, then Limassol Port can be there.

Have you had any expression of interest from port operators like Hutchison?

In the procedure we are following, we recently had the prequalification stage. From this stage, we have noticed that a lot of the main operators of the world have shown interest. We have issued tenders and prequalifications for three contracts—a container terminal, a general cargo terminal, and maritime services. The general cargo terminal also includes operation of the passenger terminal.

Will that be linked with the possible ferry to Alexandria?

We are in negotiations with the Egyptians on this route, as we are in negotiations with the Greeks and Egyptians for other cruises in the eastern Mediterranean.

So there will be another passenger terminal built for cruise ships?

No. In Limassol Port we have a new passenger terminal. There is another new one under construction now. It will be finished in next November or by the end of the year. We do not need any other infrastructure to further develop our cruises from Limassol.

How do you go about marketing to potential investors for the port? 

If you want to attract the best players in the world, you need to have a procedure that is transparent. We have hired advisors—Rothschild for financial, KPMG for technical, Pinsent Masons of London for legal, and an internal team we have within the ministry. We have a very strong team for handling this procedure. We have published this invitation for expressions of interest and prequalification documents in the local and international press—Financial Times, the Economist. Our advisors have approached a lot of potential investors. We did everything we could in order to attract the best players. On the 17th of July, the deadline for the submission of the prequalification documents, we had thirty-three submissions. That was a success. After prequalification, we had twelve prequalified firms for the container terminal, ten for the maritime services, and another thirteen for the general cargo terminal. This shows that up until now we have done a great job. We know from the airports that you are successful when you are transparent. I used to be the project manager of commercialization for the two airports in Cyprus. I know how you need to approach these investors and how transparent you would be if you want to attract the best companies in the world. If you do not attract good companies then your project may not be very successful.

Were you involved in the commercialization of the old airport to the Chinese consortium?

We were not involved. That was an initiative Hermes initiated. When that procedure did not conclude successfully, we proposed to Hermes to go out for a new international tender. We published an expression of interest last year but we were in the middle of the crisis. Nobody was interested in coming back to Cyprus. We met recently with Hermes. We discussed the issue of how to develop the premises of the old airport. Fortunately, they have hired a specialist advisor to prepare some proposals. We are going to meet again once they have these proposals and to invite an international tender to develop the premises of the airport.

How long have you been a government official?

About thirty years now. We started with highways. There was a need years ago for connecting our towns with the main port and with the main airport. We hurried to do all these things. Fortunately, we did all these things in a good way. I used to be in the Directorate of Control. I contributed to the technical and financial parts. We managed to clean the public construction sector from any construction cases. We developed this network without spending what was necessary. That was a great success. We have concentrated on this ministry a lot of knowledge with regard to the management of contracts. It is important to know how to manage construction contracts; it is not easy.

We have paid a lot of attention to this in recent years because we had very large contracts to manage. I remember one of these huge contracts was the first contract for the Limassol-Paphos highway. It used to be 48 million pounds—almost 80 million euros. We had to manage many contracts related to this order. You need to be very careful. We were lucky because we inherited the control section from the British. This used to be in the Department of Public Works. Slowly, we brought this control section to the industry. We hired more engineers. In the past, this control section was with only technicians. Once we hired engineers, we started slowly to control all the contracts of the public works department. We established procedures for managing changes on the contracts and claims of the contractors. We invited advisors and consultants who came to Cyprus and gave lectures on the management of contracts. Now we have limits on our budget. We are making the budget for the next three years. Fortunately, we have undertaken as a ministry the possibility of proceeding with a project that does not belong to our ministry. There is a budget for this project. Happily, they want us to put this budget under our umbrella. This means we are going to set aside some of our projects.

Can you tell us which project this is?

The Veregaria project. It is a huge project of nine or more million. It used to be a British housing space. These premises have a lot of asbestos. As a ministry and a public works department, we have managed a lot of other such premises. I told the director that we needed to share the budget with some of the other ministries. It does not mean we are going to pay for everybody.

Thank you, Mr. Michaelides, for meeting with us.