The Cyprus Shipping Deputy Ministry is expected to launch a new tender for establishing a ferry connection between Cyprus and Greece this October.
In December 2020 Cyprus launched a tender for re-establishing the ferry link between Greece and Cyprus. The connection ceased in 2000, owing to a combination of a fall in demand associated with liberalisation of air transport, and political turmoil in the Middle East. The tender was on the following terms:
- 36 month contract with optional 12 month extension;
- 100% national resources financing;
- €15.000.000 for the first 3 years with a ceiling of €5.000.000 per service year;
- Limassol or Larnaca to Piraeus (Keratsini terminal) route;
- 31 return sailings per service year all-year round; and
- Ro-Pax vessel, including back-up vessel.
Despite initial interest shown by no less than 24 carriers, the tender failed to attract a single bid, this failure attributed by the Deputy Ministry to COVID-19 related uncertainty. Carriers also felt unable to commit vessels for the entire calendar year, preferring a seasonal service instead.
A second tender is now ready to launch, its fundamental terms having received initial approval by the European Commission’s Directorate – General for Competition in May 2021. The reported terms include a seasonal service running between April/May and September/October with an expected 26 trips, with no parallel obligation to carry cargo, though the latter is certainly not prohibited. The state subsidy is confined to passengers and relies on an expense recording mechanism, and it is expected to remain at €5.000.000 per year. Any carrier opting to carry cargo shall lose part of this subsidy. There is also an envisaged compensation clause for fuel cost rise of up to 10% of the subsidy.
The evaluation criteria of the potential bids in the first tender attracted some criticism by the Larnaca authorities, fearing Limassol was being favoured owing to its shorter distance to Piraeus. While it is in fact voyage duration rather than distance than features in the selection equation, it is correct that the weighting it receives is disproportionate, while other factors such as proximity to the airport are being ignored. It is at present unclear whether the selection formula shall be altered. Moreover, there is a contemplated move down the other end, with the arrival port changing from the Keratsini terminal to the main terminal of Piraeus.
The Deputy Ministry remains cautiously optimistic over its upcoming second tender. The seasonal service embraces carriers’ preferences and is in line with the expected increased demand over the summer months, and the non-obligatory carriage of cargo adds flexibility. Moreover, the voyage could be extended to neighbouring countries such as Israel or Egypt further promoting connections, however such a clause is not expected to feature in the tender.
Should the second tender be released in October and attract bids, selection could take place by January 2022 with voyages commencing as early as May 2022, right on time for increased demand over the summer. Re-establishment of the Cyprus-Greece ferry connection shall foster ties between the two proud maritime nations, and offer passengers an alternative to air travel, given Cyprus currently has no passenger ferry connections.
For more information in relation to the present publication you may contact the author Ioannis Generalis, Advocate & Legal Consultant, at igeneralis@gmadvocates.com. Alternatively you may contact us for more information.
