All possibilities are now open regarding the agreement between the State and Hermes, as the Ministry of Transport is moving forward with a new contract for consultants who will provide specialized knowledge to advance negotiations and reach a compromise for the completion of Phase 2 of the airport works.

The supervision and funding for the consultants have been transferred from the Ministry of Finance to the Ministry of Transport, which, as known, has requested the release of a sum of €300,000 in a letter to the Parliamentary Committee on Finance. This request will be discussed again at the session of the Parliamentary Committee on Finance on Monday, June 12.

Transport Minister Alexis Vafeadis commented on the new developments, stating that once the necessary funds are released, the government expects to restart negotiations within a six-month period.

"We are handling the matter in collaboration with all relevant departments of the government. We are proceeding with the appointment of consultants who will determine the cost estimation so that we can proceed with negotiations with Hermes," he noted.

Any preliminary agreements reached during the negotiations in recent times will be re-evaluated. Essentially, anything agreed upon preliminarily ceases to be valid, as the new consultants will re-evaluate and re-cost what has been discussed. An illustrative example of this is the preliminary agreement to extend the airport concession for another 5.5 years (the concession agreement expires in 2031). Hermes had requested a 7-year extension, while the government consultants proposed 4 years, and ultimately, the government had preliminarily agreed to a 5.5-year extension. However, this agreement will also be re-evaluated after the new assessment by the consultants. It is worth noting that the concession agreement with Hermes for the airports will be completed in May 2031.

Furthermore, the extension of the airport concession is directly linked to Phase 2 works, as Hermes has been unable to secure the necessary funding to proceed with their implementation, Brief reports. Specifically, although Hermes was supposed to begin construction on the extension of the Larnaca Airport building, the runways, and other projects at both Paphos and Larnaca airports, the company has been unable to secure the estimated €250 million required for these works. According to Hermes, this funding can be obtained from lenders if the airport concession is extended. However, the Audit Office holds an opposing view and urges the company to make a renewed effort.

At the same time, the question arises as to what can be done if this funding ultimately cannot be secured by Hermes, and thus Phase 2 cannot be implemented. One possibility, provided for in the Concession Agreement, is the cancellation of the agreement with Hermes before its completion in 2031. However, as sources told Brief, this possibility is considered extremely low.

It should be recalled that since 2006, when Hermes assumed control of the airports with a 25-year concession agreement, they have secured a loan of €600 million with the state as the guarantor, which is expected to be repaid by 2025.

On a different note, during the briefing, a representative from the Audit Office emphasized that the new advisors should carefully assess and accurately estimate not every aspect discussed in the negotiations, but rather focus on those that can be legitimately agreed upon.

In addition, the Audit Office urges Hermes to make a renewed effort in securing funding. The company had previously sought financial support by presenting their revenue figures during the pandemic. According to the Audit Office representative, Hermes has the opportunity to repeat the funding process, this time highlighting their current increased revenues, which surpass the previous period when the airports were underperforming.