Privatisation of marine services at Limassol port

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By Stelios Louca Stylianou*

There is no doubt that the privatisation process at Limassol port was clumsy. It lacked vision and substantial economic parameters, but above all, it failed to exploit the opportunities and unique advantages that Cyprus has to offer in this area.

The situation is reversible but requires the correct approach. It was a unique opportunity for Cyprus to overcome financial difficulties, take advantage of enormous investment opportunities, and solve its unemployment problem, low growth rate and much more.

Unfortunately, this is still a major issue that must be addressed by the Republic. We need Central Strategic Planning (Master Plan) for the development and utilisation of all our ports, including those of Famagusta and Xeros.

portThe most incorrect privatisation parameter, however, is the concession of marine services at Limassol port, a service that typically falls under the ministry of merchant shipping or the port authority of a state. In the case of Cyprus, it should be under the department of merchant shipping or the Cyprus ports authority.

It is a service that cannot bring additional traffic or volumes to the port but the service safety factor increases the satisfaction of maritime companies. If the safety factor is low, it reduces satisfaction and prevents the movement of large ships. It is worth noting that serious accidents in the recent past in the Mediterranean Sea were due to the absence of a pilot navigation service that resulted in the loss of lives and caused pollution of enormous destruction.

The normal practice applied in many countries is that conditional contracts would be granted to foreign companies with recognised expertise which would provide training to the locals so that they could gradually take over the manning and operation of the service.

The local presence is considered vital because a pilot navigator is the first person to go on board a vessel entering the port. The pilot will check and report cases concerning security issues and compliance with rules and protocols. The pilot on board a vessel is acting as advisor to the captain but in actual terms has the control. The pilot is a very experienced master mariner with several years of experience on board vessels and specific experience in his area of operation. He has to continuously study and learn new systems and navigation techniques so he can make decisions to prevent damage, accidents and the interruption of access to and from the ports.

At the same time the pilot must be an expert in the specific area of operation, expert on manoeuvrings of any kind and type of vessel, as well as provide safe mooring at the port and save passage out of it.

Having said the above, it is also the usual practice, for countries to offer this vital service through dedicated operation agreement with companies that fulfill requirements and criteria for providing pilotage services, etc. This occurs in all countries with very few exceptions where the service remains entirely in the state.

Limassol portAll these however, do not have much significance today, since the service in Limassol port has been awarded to P & O Maritime (note: a unit of Dubai Ports).

Knowing all the above makes it possible to realise what ignited the pilots’ strike recently and the minister’s statements and his intention to revise existing regulation for the employment of Cypriot pilots.

Fortunately, in his instance, the intervention of (note: Citizens’ Alliance deputy) Anna Theologou was effective and the strike was terminated. Cyprus’ economy and business community cannot rely on such interventions. A stable environment from a permanent solution is what required.

It might be very useful for future reference to study the sequence of events from 2014 and the various proposals involved, which in my opinion could solve the problem, even without compensation and such incentives, but have been rejected.

What really matters is to have this service operate seamlessly, effectively and efficiently serving navigation now and in the future. To make this possible, pilots should simultaneously provide services to existing traffic and operate a training programme for new pilots and crew for both, pilot and tugboat services.

The duty, responsibility and liability lies with everyone involved.

P & O Maritime is committed by contract to provide these services from January 2017 for 25 years. According to the tender specification it was required to have knowledge of existing conditions and legal framework, operational arrangements, rules and protocols.

One such regulation stipulates clearly that only Cypriot shall be employed for navigation in all ports of Cyprus, for reasons the company itself knows best since it is a company operating globally for several decades under similar conditions.

Revision of this system is not possible for many reasons, one of which is the unfair advantage after the award of the concession agreement to the detriment of companies that lost the bidding process.

Therefore, P & O Maritime will implement the rule of existing laws and regulations, defining the methodology according to which it will operate with Cypriot pilots. The form of cooperation should not be the concern of any other than the two parties.

Every day of delay in finalising an agreement is delaying recruitment and training new pilots and tugboat personnel.

Pilots have an obligation, duty and responsibility to engage in dialogue with the operator of this service, solely driven by willingness to finalise an agreement as soon as possible.

In no case, however, should there be disruption to the navigation of vessels.

Pilots must commit irrevocably and effectively and certainly engage in negotiations.

Having in mind the recent involvement of the minister, repetition would be counterproductive and could trigger new conflicts. Last week’s strike was due to the minister’s statement over the threat of changing the regulation concerning the pilots’ nationality.

port strike 1The role of the ministry was to finalise and conclude the concession agreement. This is now over and so the role of the ministry has come to an end. After signing the contract, the minister must designate a representative to act as administrator and supervisor of the agreement. In addition, the relevant parliamentary committee as well as other government and autonomous agencies are to have the responsibility and control on the basis of existing legislation.

It is worth noting that the Cyprus government doesn’t have any benefit from the reduction or fluctuation in any way of cost implications. This is the responsibility of the operating company. Leaving aside that state intervention cannot be acceptable by any standards as yet could be taken as a sign of fixation for personal benefit.

Pilots on the other hand know very well that cannot benefit, if they try to exploit the situation.
The equation is simple. P & O Maritime needs Cypriot pilots to operate maritime services, Cypriot marine pilots are required to offer the services.

The solution is simple, P & O Maritime + Marine Pilot/Navigators = Cooperation. Last but not least, the stakes are very high, beyond the interest of anyone or any organisation. Therefore, solution now is vital.

(*) Stelios Louca Stylianou is a Ports Management Consultant ([email protected])

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Mist

    One slight omission, the requirement is Greek/English speaking, it fails to mention the other state language………………..

    • SuzieQ

      Where would you suggest I insert it??

      • Mike

        Please! Suzie, I have you on a pedestal up there with Adele – don’t destroy my self induced admiration – but I like it!

        • SuzieQ

          I model myself on Adele!

      • Argent

        I could make a few suggestions.

  • Costas Apacket

    Here we have a typical Cypriot cake and eat it situation where the pilots have been paid disgraceful amounts of money effectively for their redundancy and now they actually want to keep their jobs as well as the money.

    Only in this back to front place could we even be talking about something so ludicrous.

    • Stelios Stylianou

      This is a good question actually the Minister has to answer. Why he insisted to privatize a service knowing that Cyprus doesn’t have alternative?
      Concerning redundancy compensation, we must have in mind that offered amount is far from being adequate, to start with, considering that these people are at their mid-40’s early 50’s and they will be unemployed. Have in mind that navigators propose a solution with-out redundancy or any kind of compensation, which the minister rejected.
      The most important question is the safety of navigation. This was known to the Minister since 2014 that any change on this status shall jeopardise safety with destructive results. Is a life threatening approach as yet the risk of pollution is very real. The first test at Vasiliko was not successful and Port Authority reinstated control after two accidents.
      Moreover, during the next two years 12 additional navigators shall be required. With-out training from existing navigators, multibillion dollar operations cannot kick-off.
      We have to examine something thoroughly before we start firing and blame, point fingers or determine whose fault is.
      Last but not least… The Minister doesn’t allow pilots to resign and leave because with-out them ports and other facilities cannot operate, same time he want to impose on them to work for much lower salary than industry standards. Having said that, please note that Navigators salaries are as low as US$85,000 at east African east coast, where average income for a family is under US$12,000 per annum and goes above US$ 550,000 per annum at North Europe and American Continent.

      • Costas Apacket

        Perhaps the new operator wants to employ people with a mindset and culture of co-operation and a willingness to adapt to new modern working practices rather than the current skills of bloody minded obstinacy, drinking coffee and playing tavli?

        • Stelios Stylianou

          The operator has obligation to operate with-in contractual parameters. Cooperation -when it comes to concession agreements- is regulated and guided by assumed responsibilities of both parties involved. Legal framework and International protocols are applicable across the globe. Why Cyprus shall be exempted and try to reinvent the wheel?
          In any event the operator didn’t by any way so far, indicated framework or business approach that could substantiate further development or modernisation for that matter. The contrary, try to impose third-world manning principles, which can only jeopardise safety and security of shipping and violates mandatory UN and International Maritime Chamber, protocols.
          Moreover, P&O Maritime have to go long way, to prove their value after the bankruptcy and restructuring attempt, under Dubai World ownership.
          I have to point out however, that Cypriot navigation and towing services, are amongst the best in Mediterranean region and maintain one of the best records according to IMC. I’m not sure how familiar you might be with the specific operation but most certainly your views are far from reality. They work very hard for long hours in order to ensure availability of service, on time.
          One could wonder, what is really at stake? How important is to have control over navigation and towing in Cyprus? Is it about the port of Limassol? or is it multi-billions industry in the making. What are the benefits for Cyprus?
          This issue is huge, beyond a simple port operation. According to the solution on this problem will be the development and benefits of several economies and Nations. We are obliged to stand tall and think accordingly, not to destroy our future based on disorientation from the actual facts and diversion, from what it is to what is not.
          Those who are trying to implement illegal and improper methodology, have the expertise, know-how and strategic plan because they know what the name of the game is.
          My next article (in due time and depends on availability of space) will be exactly on this aspect and the necessity to design our requirements for development of this opportunity.

          • RudyDajuda

            “Moreover, P&O Maritime have to go long way, to prove their value after the bankruptcy and restructuring attempt,”
            Cannot find any relevance to the skillful piloting in any port of the World by any nationality…
            On the other hand, it is a well known fact, that P&O navigating the World’s oceans since long before the invention of the CPA Pilots…

          • Stelios Stylianou

            Dear RudyDajuda, I will start from the second part. Cypriot navigators been in business long before P&O existence, which goes evidently before 3000 BC.
            However, it is well known fact that P&O Nedlloyd (to which you refer) was one of the largest shipping companies, not navigating service, which was bankrupt few years ago and as a result of that event, pension plans, insurance policies of its employees been lost and employees shares value vanished. People were left with nothing after decades of service.
            In relation to the first requested clarification, please note that one of the most crucial characteristics of the values of any organization is to prove compliance with legal framework and respect of contract conditions under which assume the management of a project. Value, is as well modern operating principles. Such organizations have in place procedures to evaluate by high appraisal standards, the skills and ability not only of their employees or prospective employees but associated services providers, who could add value to their reputation.
            These are few of the crucial parameters P&O Marine as well as DP World and Eurogate, shall comply with and prove in tangible manner.
            Declarations and statements shall be proven with actions, especialy in a country they come to operate for first time.

          • Argent

            There were cruise ships coming to Cyprus 3000 years ago.

          • Stelios Stylianou

            Navigators operated in Cyprus since then. This is a historical fact.
            The discovery of copper on the island around 3000 B.C. brought more frequent visits from traders. Cypriots operated Trading ships soon after that, which were transferring copper, oil, almond, etc, to various destinations and return back with new settlers to exploit the mineral wealth.
            However, the issue of cruise ships is very important. CPA spend €20 million for the construction of new arrival hall to handle 4,000,000 passengers which will not utilise in foreseeable future (say 20 years). Same time, it might be interesting to know what revenues been recorded from cruise ships and passengers during the past few years. Very low amount, unfortunately …

          • Argent

            I was having a laugh with you “S”

          • Costas Apacket

            Here we have lots of Cypriot style blah, blah, blah and misinformation from the debate forever school of thought which has plagued and stagnated Cyprus since 1960.

            This blah, blah, blah, is designed to try and deflect from the facts that the Cypriot Pilots are a set of unionised vermin who do not think twice about holding their ‘so called’ beloved country to ransom, blackmailing and demanding extortionate sums of money to sell their ‘stake’ which they don’t even own, and being true to their culture of being totally self interested above any thoughts for the well being of Cyprus.

            The sooner these and other restricted parasite professions are opened to competition the better it will be for everyone concerned.

        • Argent

          To true, if that is the case, they wont employ locals then.

      • RudyDajuda

        The uncomplicated tiny Limassol port and the adjacent maritime area is not to compare to Stockholm port or the Gulf of Bothnia.
        By this way, the quoted average income differences are quite understandable..
        Just one thing, what you did not mention: in Northern Europe the state employed pilots think twice before before going on srtike, otherwise despite all special knowlegde, they are fired, stande pede….

        • Stelios Stylianou

          Dear Mr. RudyDajuda Tiny Limassol port and the adjacent marine area apparently is not very small. Only persons who do not know what is at stake and what the value of the business in reference is, make such wrong statements.
          Certainly shipping companies who plan their involvement in the region and are registering offices in Cyprus, doesn’t think so.
          Do you suggest to give P&O Marine unfair advantage after they sign the concession agreement? Their commitment was in accordance with the law and regulations in Cyprus. In case the contractors feel that they cannot comply with their duties and assume responsibility they have to say so.
          Where in Northern Europe when state and / or port employees are being fired because of a strike or strikes? In France? Belgium? Denmark? Sweden? Germany? The Netherlands? In all these countries there are strikes every week. Please do not try to invent stories.

          • RudyDajuda

            Oh really?
            I never noticed that in Rotterdam…
            Maybe because it was not their declared aim in advance to paralyze the country…
            Thank you for your reaction,

          • Stelios Stylianou

            Apparently the Minister in The Netherlands doesn’t threat pilots with revision of the law… as yet pilots didn’t strike when privatisation was in process because they support the effort and of-course they never declare that their aim was to paralyse the country.
            They reacted to the Ministers’ threat and allow him a week to withdraw his statement, which he didn’t.

          • RudyDajuda

            I think the per capita lawyer, legal adviser density is high enough here to solve any disagreement in a contract… negotiate, compromise…reject, approve, give and take…
            When it is fruitless, in a democracy, as we agreed long ago, the final word is for the judge. Until the legal options are not completely exhausted, those beloved “dynamic actions” are merely to keep the country and the economy hostage of a few irresponsible citizens.
            Citizens and not highly trained, skillful and responsible people, as you wanted to introduce them to the public, above…

          • Stelios Stylianou

            As much as some would wanted, this is not a contract disagreement nor court of law case to deal with.
            This is a concession agreement supported by bank warranty for implementation.
            its a case of do or die. If the contractor is not capable to comply (already the appointed manager disagree with his company and resigned) then others are on the waiting.
            I’m not sure how much you appreciate law and order and based on what substantiation you are trying to reduce the professional integrity of people who maintain a perfect record. This is the law and P&O shall apply it. When you have those evaluation documents on the performance of pilots and tugboat personnel available, post them for all to see.

          • RudyDajuda

            CM reported a week ago about their intention: “We are going on indefinite strike”, said more about their responsibility than all evaluation of their performance.
            Using any ecstatic markings regarding their performance annuled by two words: greed and lack of responsibilty…
            If you can give us examples about the forced redundancies in the past three years in the private sector, where the same generous conditions applied, please do…

          • Stelios Stylianou

            The minister who introduce redundancy plan has to explain why and what. He has to explain as well why he didnt allow Pilots and Tugboat personnel to resign a year ago, with out compensation? Why the minister doen’t allow them to resign now?
            The big question is why the minister insist to be involved with a signed contract? This is the duty and responsibility of various government departments to implement and control the signed contract.
            Nevertheless, it has to be noted that what you refer as generous conditions are simply an insentive to force permanent employees out of work, prepared and suggested by the ministry..

      • Stelio, you mentioned “safety” several times, surely the Pilots taking strike action compromised safety?

        Then you did not mention the damage they do to our economy through their strike action.

        Reasoned communication is the way forward, and it has to be said that the Pilots remunerations are way above the International norm, this has to be resolved by the company coming in and wishing to be profitable.

        • Stelios Stylianou

          Dear Kilroy, safety was not being compromised since movement of vessels was restricted. Cruise Ships and Navy vessels were excluded during the 36 hours strike.
          All these wouldn’t and/ or shouldn’t happen if communication channels been utilised, which was not and unfortunately is not the case.
          With regards to existing remuneration agreements, there are various aspects to consider.
          1. P&O Maritime signed the concession agreement knowing the law for Cypriot Pilots, Knowing they had to operate with them and knowing their wages. Change on this law wouldn’t be unfair advantage and Cyprus could be liable to compensate in case of lawsuits?
          2. If remunerations are at high or low side can be substantiated. Compare with remunerations in the States, Canada, Japan, etc. is far below the US $220,000 – $550,000 per annum, when compared with regional wages such as Egypt, Jordan, and North Africa, is slightly above the US$85,000 per annum
          3. P&O Maritime, should have their profitability calculations and tender price established according to existing conditions.
          4. P&O Maritime didn’t responded for more than one month to the calls of Marine Services personnel, to enter in discussions. How this issues can be resolved if not during discussion and negotiations?

          As you can appreciate, tension and lack of direct communication doesn’t help. The intervention of third parties who -in my opinion are trying to secure their own interests- doesn’t help either.
          I hope the two parties agree on this issue soon. At the end of the day shipping and port operation shall continue operating.
          Both parties are considering their options as we speak. Wouldn’t be the best solution to engage a new company to partner with pilots and offer services to P&O Maritime.

          • RudyDajuda

            Yes,it would be the best solution to engage a new company with pilots and offer services to P&O Maritime without involvement of any union activity. Strictly following contractual obligations is always the easiest way…

          • Stelios Stylianou

            Why you consider union involvement as difficult? As you can appreciate, any company shall operate with employees and employees are at liberty to be represented by union.
            When P&O Maritime, DP World and EUROGATE submitted their proposal and sign concession agreement was under the applicable laws in Cyprus. It is therefore their obligation to abide by the law, one way or the other.
            Contractual parameters shall certainly apply in that event, however, dont forget that contracts are concluted in accordance with legal provisions.