Ministry defends €27 mn payout to 31 porters
23/7/2015 10:35
The ministry of Transport, Communications and Work defends the decision to grant a €27mln-compensation to porters of the Limassol port, pointing to the opportunities this arrangement creates for the further development of the port.
Alecos Michaelides, General Director at the Ministry of Transport, Communications and Work and President of the Cyprus Ports Authority, stated to Stockwatch, that the deal resolves a long-standing issue and opens the way for the efficient operation of the Limassol port.
The government regards the recent deal with the porters as beneficial for all sides.
"This would be for the long-term benefit of the Cyprus economy" he stressed.
Commenting on the various reports that critisize the agreement due to the provocatively high amount of €27 mn to be paid to the 31 Limassol porters, Mr Michaelides explained that it was maybe an oversight by the ministry not to breakdown this amount and explain how it was derived but said that at least €16,5 mn are related to various amounts due by the porters and so what they will really get is not the €870K average for each.
He mentioned that the amounts due by the porters are mainly due to tax authorities and for the purchase of the equipment they use. Although these amounts are still a benefit to the porters, as they will settle these obligations, it is not an amount that they will get in cash.
He said that in two occasions in the past, first in 2006 and then in 2008, the shipping agents association offered to buy this group out for about €32 mn but the offer did not go through due to other reasons as there was a fear that the association maybe subsequently accused of collusion.
Asked why the government did not act proactively to stop the current status with this group of port workers as it was grossly benefiting from the prevailing regime probably by acting in a decisive manner, Mr Michaelides said that since ports are a sensitive sector and certain expertise and skills are needed for its proper operation one cannot just act unilaterally.
"Now the time has come that the porters realised that the government was not going to tolerate the current status any more and so they accepted a deal" he stated.
Port operation
Asked why the government does not undertake the port operations itself so as to benefit from the new status given that the operating profits are quite high based on what the minister stated last week to the parliament instead of finding a strategic investor, Mr Michaelides explained that the ports are in real need of getting modernised both in terms of equipment, something that implies large investments, and up-to-date expertise.
"The cranes as well as other essential equipment need to be modernised so as for the ports to be able to operate on a 24 hour basis" he said, "this needs large amounts of money".
Mr Michaelides explained that the work of loading/unloading from the vessels is done by staff and machinery that belong to the Ports Authority and has nothing to do with the group of 31 porters.
"The duty of the 31 porters is to store loads using basically forklifts" he explained and that is why the estimated equipment to be acquired from them and included in the deal, amounts to just €3,5 mn.
"The deal with the strategic investor will entail the full modernization and efficient operation of the ports on a 24 hour basis" Mr Michaelides stated "and this will produce high income for Cyprus as the agreement will provide for a portion of the total turnover to be paid to the state" he concluded.
According to Mr Michaelides the finalization of a deal with a strategic investor is expected in the first quarter of next year.
This will deal with the privatization of Limassol port's commercial activities which is one of the privatization actions provided in the economic adjustment program, the others being the privatization of CYTA and EAC.
Alecos Michaelides, General Director at the Ministry of Transport, Communications and Work and President of the Cyprus Ports Authority, stated to Stockwatch, that the deal resolves a long-standing issue and opens the way for the efficient operation of the Limassol port.
The government regards the recent deal with the porters as beneficial for all sides.
"This would be for the long-term benefit of the Cyprus economy" he stressed.
Commenting on the various reports that critisize the agreement due to the provocatively high amount of €27 mn to be paid to the 31 Limassol porters, Mr Michaelides explained that it was maybe an oversight by the ministry not to breakdown this amount and explain how it was derived but said that at least €16,5 mn are related to various amounts due by the porters and so what they will really get is not the €870K average for each.
He mentioned that the amounts due by the porters are mainly due to tax authorities and for the purchase of the equipment they use. Although these amounts are still a benefit to the porters, as they will settle these obligations, it is not an amount that they will get in cash.
He said that in two occasions in the past, first in 2006 and then in 2008, the shipping agents association offered to buy this group out for about €32 mn but the offer did not go through due to other reasons as there was a fear that the association maybe subsequently accused of collusion.
Asked why the government did not act proactively to stop the current status with this group of port workers as it was grossly benefiting from the prevailing regime probably by acting in a decisive manner, Mr Michaelides said that since ports are a sensitive sector and certain expertise and skills are needed for its proper operation one cannot just act unilaterally.
"Now the time has come that the porters realised that the government was not going to tolerate the current status any more and so they accepted a deal" he stated.
Port operation
Asked why the government does not undertake the port operations itself so as to benefit from the new status given that the operating profits are quite high based on what the minister stated last week to the parliament instead of finding a strategic investor, Mr Michaelides explained that the ports are in real need of getting modernised both in terms of equipment, something that implies large investments, and up-to-date expertise.
"The cranes as well as other essential equipment need to be modernised so as for the ports to be able to operate on a 24 hour basis" he said, "this needs large amounts of money".
Mr Michaelides explained that the work of loading/unloading from the vessels is done by staff and machinery that belong to the Ports Authority and has nothing to do with the group of 31 porters.
"The duty of the 31 porters is to store loads using basically forklifts" he explained and that is why the estimated equipment to be acquired from them and included in the deal, amounts to just €3,5 mn.
"The deal with the strategic investor will entail the full modernization and efficient operation of the ports on a 24 hour basis" Mr Michaelides stated "and this will produce high income for Cyprus as the agreement will provide for a portion of the total turnover to be paid to the state" he concluded.
According to Mr Michaelides the finalization of a deal with a strategic investor is expected in the first quarter of next year.
This will deal with the privatization of Limassol port's commercial activities which is one of the privatization actions provided in the economic adjustment program, the others being the privatization of CYTA and EAC.