T. Mitsopoulos: Cyprus shipping sector stands strong despite economic crisis

10 Oct 2015
5Mitsoplos

In an exclusive interview with The Shipping Herald, Mr. Tasos Mitsopoulos, Cypriot Minister of Communications and Works, discusses the prospects and future of shipping for Cyprus as well as the effects of the banking crisis on Cyprus as a major ship-management center. Mr. Mitsopoulos also reveals the country’s plans for financing shipping infrastructure and developing its ports as well as new geopolitical balances in the region and how will the EEZ help the economy of Cyprus, especially energy and shipping.

Q: How has the banking crisis affected Cyprus as a major ship-management center?

Cyprus is today a fully fledged maritime center, combining both a sovereign flag and a resident shipping industry which is renowned for its high quality services and standards of safety. Despite the banking crisis that affected the island´s economy, the shipping sector stands strong. The proactive actions and measures which were taken have minimized the negative effects on Cyprus shipping. The overall shipping infrastructure in Cyprus remains intact. Under the current financial circumstances, the Cyprus Shipping Sector is invited to play an even more leading role, as it constitutes a crucial part of the “spinal column” upon which the Cyprus economy will depend its course towards recovery.

Q: What is your view of the prospects and future of shipping for Cyprus in this unprecedented crisis?
Shipping is a significant pillar of our economy in its capacity to act as a wide gateway of foreign investments to our island. It constitutes a business sector for which Cyprus is proud of. It represents an invaluable asset for Cyprus with significant political and economic advantages. Therefore, it is of paramount importance for our economy to safeguard the shipping industry. Our ambition is to be a step ahead of competition at any time, both as an international registry and as a base for international shipping operations.

The Cyprus Government is well aware of the fact that the Cyprus shipping sector operates in a continuously evolving highly competitive global environment and that this, in turn, requires a stable environment which supports long-term planning and investment, in view of the decreasing profit margins.

The Cyprus Government, the Central Bank of Cyprus, the Cypriot maritime cluster, the organized groups representing shipowners, managers and seafarers and those providing services to the shipping industry are in close liaison and my Ministry through the Department of Merchant Shipping will continue monitoring the situation and will continue to promptly and proactively deal with any matters stemming from the circumstances.

The sustained growth of Cyprus Shipping is one of our priorities and our aim is to maintain Cyprus´s leading role in the world shipping scene through the continuous development of Cyprus shipping.

The main efforts of the Ministry of Communications and Works, through the Department of Merchant Shipping, are focused on the further improvement of its services and facilities, the incentives available to both residents and non-residents and the enhancement of the international reputation and the competitiveness of the Cyprus flag as a maritime flag and of Cyprus as an international maritime centre.

We look into the future with confidence. With systematic work, the implementation of proactive actions and measures, the maritime sector of Cyprus will continue to grow and develop under the new image of a quality-oriented and competitive registry and shipping center.

Q: What is being done to strengthen the country´s reputation as a serious maritime flag?
The government’s maritime policy is established on three pillars QUALITY, COMPETITIVENESS and RELIABILITY. The maintenance of a high quality fleet and the effective implementation of the internationally applicable safety, security and environmental protection standards, is the foundation on which Cyprus builds its reputation as a serious maritime flag and as a base of international operations.

Cyprus follows the modern approaches, which the international shipping environment dictates. The Ministry of Communications and Works, through the Department of Merchant Shipping, continuously improves and updates the incentives offered to shipping entrepreneurs, and explores new incentives ensuring that Cyprus’s attractiveness and competitiveness as an international shipping centre are safeguarded. The adoption and implementation in 2012 of the new Piracy Law which is a pioneering legislation establishing the required legislative framework allowing the use of armed personnel on board Cyprus flagged vessels, in a regulated manner, when these vessels are sailing through high risk areas and the Tonnage Tax system for Cyprus shipping which was adopted in 2010 and is now fully deployed , are measures that provide new impetus for the whole shipping industry of the island and create great prospects of future growth.

Q: Is there scope for shipowners to contribute more to the Cypriot economy?
The contribution of shipping to the Cyprus economy is already significant and is estimated to be higher than 5% of the GDP. We are grateful to all those shipowners that have placed their trust in the Cyprus flag and have established their business in Cyprus. Their support is acknowledged by the Government and in particular by the Ministry of Communications and Works. Therefore, in hard times like these, what we have to ensure, is the continued competitiveness of our ship register by maintaining and improving the quality and efficiency of our services so that those shipowners that support our ship register continue to do so and furthermore if possible register more ships under our flag.

Q: Will Cyprus have trouble financing shipping infrastructure and continue developing its ports?

The responsible body for the administration, construction and management of Cypriot ports infrastructure as well as the entity responsible for the ports commercial activities, is the Cyprus Ports Authority. The semi-governmental autonomous body established by law in 1973, is governed by a Board of Directors appointed by the Council of Ministers. As a semi-autonomous organization, it has to obtain Government approval for major policies and actions. In addition, its investment activities are described in its annual budget which has to be submitted annually to the Government for evaluation and any possible modifications and to the House of Representatives for approval.

Despite the global economic crisis impacts on Cyprus’s economy as well as on the maritime movement of Cypriot ports, Cyprus Ports Authority remains to be an economic robust organization, maintaining its profitability and liquidity. This fact, allows the Organization to keep in line with its targeted development plan.

Cyprus Ports Authority’s development plan has a special focus on the prospects generated, among others, from the development of Liquefied Natural Gas (LNG) in shipping as well as works for exploiting hydrocarbons found in Cyprus’s Exclusive Economic Zone (EEZ) and neighboring countries. Having this a stepping stone, the strategic goals of the Authority are highlighted as follows:

• To attract as much transshipment and cruise trade in order to enable Cypriot ports to register significant growth both in terms of throughput and performance ∙
• To handle Cypriot trade at the lowest possible cost ∙
• To keep in line with the general policy that is being guided by the European Union for the sector ∙
• To follow a high investment programme in a unique combination of procedural simplifications, of state‐of‐the‐art facilities and container handling equipment, top‐notch technology as well as personnel development through productivity enhancement ∙
• To actively act as an entity promoting social and environmental development.

Those goals will continue to be served regardless of the economic challenges raised or any other challenges that might come up. To be more specific, a well-planned and vital development project plan, of a total cost of over 80 million euros coming directly from Cyprus Ports Authority’s resources and EU funds, is already under realization.

Several projects have been completed or are under construction at Lemesos port, which is the main commercial port of Cyprus.

The port’s western container terminal basin has already been dredged to -16 meters as well as the port’s turning circle and entrance channel, to -17m. Further, the extension of the port’s western basin quay by 500 meters is estimated to enter in its construction phase before the end of the year, whilst completion of this project is expected in two years time.

The construction of a new passenger terminal is already in progress, fully compliant with EU safety and security requirements. The new passenger terminal of a total area of 6.800m2, includes’ one departure hall, two arrival halls, separate area for luggage handling and receipt, a high class restaurant on the 1st floor and a big parking place as well as offices for providing all necessary high quality services to visitors.

The port’s capacity will be enhanced with a series of other projects in the mechanical and electrical fields, the most significant of which being, the purchase of three super-post-panamax gantry cranes and a new 60 tons capacity tug boat.

Completion of planned efforts for Lemesos port, is estimated to be reached upon the completion of the port’s segregation into two parts, separating its twin character i.e. in a commercial and a passenger port.

In as far as Vassiliko port is concerned, which is the main port for bulk cargo of industrial origin and dirty cargo, ongoing discussions amongst various Governmental Departments are being held for the final configuration of the master plan for the port’s construction. The overall aim is to enhance port’s performance, whilst at the same time considering, the new perspectives which emerged from the hydrocarbon levels found in the Exclusive Economic Zone (EEZ) of the Republic of Cyprus. An additional boost on the port’s operations is the construction and operation of a new jetty for which relevant licenses have been granted to Vitol Tank Terminals.

Of considerable importance is also the project related to the redevelopment and redesigning of the Old Lemesos port, which is in its completion phase and is funded by CPA’s resources.

Special reference is made to a new information technology project currently under implementation. This aims at developing specialized applications, such as the port community information system (Port Community System), suitable to link all actors (stakeholders) and services engaged in the supply chain on a single submission point.

Finally, as already mentioned herein above, the Authority in its efforts to satisfy in the best possible way, short term and long term needs of companies that engage in hydrocarbons exploration and exploitation within the Exclusive Economic Zone of Cyprus and the neighbouring countries has proceeded to needed corporate planning and several operational actions that will allow satisfying needs of the sector and at the same time utilizing opportunities generated.

Q: The discovery of energy reserves off Cyprus is creating new geopolitical balances in the region. How will the EEZ help the economy of Cyprus, especially energy and shipping?
The geopolitical situation in our area is changing fast and Cyprus is once again in the center of these developments. New political balances are emerging which are not unconnected with the discovery of energy reserves in our area.

The recent discovery of natural gas in the Exclusive Economic Zone of Cyprus creates even greater prospects for Cyprus Shipping and of course the country as a whole. Cyprus can develop into an important Energy Center in the Mediterranean. New and vibrant shipping and energy projects can be launched and the policy that the Cyprus Government will implement will include Cyprus´s future maritime transport needs for our hydrocarbons.

Q: How are the efforts to lift the Turkish embargo on Cyprus ships developing?

We are still facing the illegal trade restrictions imposed by Turkey since 1987 against Cyprus shipping (Turkish embargo). The illegal and discriminatory restrictive measures imposed by the Turkish Government on ships flying the Cyprus flag certainly violate the Customs Union Agreement between, the European Union and Turkey and the Protocol thereto, which extends the Agreement to the States which became members of the European Union in 2004.

The Cyprus Government, on a regular basis, submits to the European Commission factual reports which document the violation of the provisions of the Agreement by Turkey. These reports provide also a record of the attitude of Turkey, a State aspiring to become a member of the European Union, to implement the European Union acquis. The reports of the European Commission on the progress of the accession negotiations with Turkey always contain a specific remark that Turkey has to withdraw the restrictive measures which has in place against ships flying the Cyprus flag as they are in violation of the Agreement.

The efforts made by the Cyprus Government for the lifting of these illegal restrictions will be continued and further intensified.

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