28 May 2024 (Lloyd's List) - THE future of the Port of Larnaca, Cyprus, has been thrown into chaos after the Cypriot government ripped up an agreement with Kition Ocean Holdings to develop the port.

Kition was given control of the port in April 2022, with a view to developing a 10-berth terminal and yachting marina.

However, this week control was handed back to Cyprus Ports Authority after transport minister Alexis Vafeades told Cypriot media Kition failed to pay financial guarantees on time.

Yet the company told Reuters “the government’s behaviour undermines the rule of law that should exist to protect investors”, and said the decision coincided with separate legal proceedings being carried out by Kition against the government.

Phileleftheros, the biggest Cypriot newspaper by circulation, reported that relations between Kition and the government began to worsen in January 2024, when Kition failed to renew a €10m ($10.9m) bank guarantee — which Kition claims should be €4m — and instead submitted requests for design changes.

The government then claimed Kition reneged on commitments made in April, Phileleftheros reported, which resulted in the letter of termination being delivered to the company.

Larnaca is a key port in the effort to deliver aid by sea to Gaza, but Vafeades allayed fears this operation would be disrupted on Cypriot radio.

He confirmed that Kition was loading a ship with aid for Gaza, and control of the port would be handed over to the state only after this was completed.