Filenews 13 October 2023 - by Eleftheria Paizanou
The conflict between the Audit Office and the Ministry of Finance is well under way, in relation to the second phase of the construction works at Larnaka and Pafos airports by the airport operator Hermes Aırports.
This time the occasion was the posting of a video by the mayor of Pafos, Phedonas Phedonos, on social media, in which he shows the inseparability at Pafos airport.
For the last 24 hours, a paper war of announcements has been going on between the Audit Office and the Ministry of Finance. Yesterday, the ministry responded to accusations made in the previous days by the Audit Office, which spoke of a scandalous preliminary agreement between the Ministry of Finance and the company, in relation to the management concession agreement and the non-start of the second phase of the works.
'No deal made'
According to the ministry, the statements of the mayor of Pafos present the facts in a fragmentary, incorrect and misleading way, thus distorting reality and creating negative impressions. According to the announcement, the Ministry of Finance reiterates that no agreement has been reached between Hermes and itself on the extension of the concession contract for the management of the airports and the satisfaction of the company's requirements.
It also stresses that the expansion of the premises of Pafos airport, which is the aim of the statements of the Mayor of Pafos and the announcement of the Audit Office, was not included in the concession contract.
However, during the discussions held in 2022 between the Ministries of Finance – Transport and the managing company, the possibility of the expansion of the Pafos airport terminal building being included in the additional investments of the second phase was discussed, with the simultaneous removal of other works provided for in the contract, as part of the agreement to be signed if and if the conditions under which the whole was carried out were met negotiation process.
The facts
At the same time, the ministry cites the facts, saying that the concession contract includes milestones for the start of construction of the second phase. "The milestone concerning the overcapacity of Larnaka Airport was met in 2016 and according to the provisions of the Concession Agreement, the milestone of the start of construction of Phase 2 was automatically activated for Pafos Airport as well," he stresses.
At the same time, he notes that the company's request was rejected when it resorted to a fast-track dispute resolution procedure to proceed with improvement works at airports and postpone indefinitely the construction of the second phase, noting that Hermes should proceed with these works. In addition, the Republic has proceeded to an arbitration procedure against the managing company to implement the projects, otherwise to compensate the state.
According to the ministry, the company is unable to secure financing from banks to carry out the expansion projects, so last year discussions continued between the 2 parties and options were explored that could facilitate the company to find financing and at the same time, in a holistic approach, would lead to the resolution of the chronic pending issues (which remain today) and concern claims of the managing company against the Republic and the which he would renounce if there were a wider understanding.
Odysseus: "The Ministry of Finance adopts Hermes Airports' positions"
A response to the positions of the Ministry of Finance was given yesterday via Twitter by the Auditor General Odysseas Michaelides, who argued that the relevant announcement adopts the positions of the managing company against the interests of the Republic.
"In particular, the ministry's position that the judges' decision, issued in 2021, "does not oblige the company to construct the Phase 2 projects constitutes an unacceptable and dangerous adoption of the positions of the managing company," it stresses. At the same time, it indicates that the concession agreement provides that the non-construction of the second phase is a reason for terminating the agreement, under the responsibility of the contractor.
"The Ministry of Finance does not hesitate to adopt positions contrary to the official positions of the contracting authority, in a way that harms the interests of the state, simply to justify the unacceptable preliminary agreement it had reached and by which, without any open procedure, it would have given the company a contract worth €1.5 billion," it said. In conclusion, he argues that "the agreement did not have time to be sent to the EU for approval, because the Parliament rightly did not approve the fund for the agreement with consultants, illegally concluded by the Permanent Secretary of the Ministry of Finance
