Cyprus can play a central role in facilitating regional development in the energy sector and has what it takes to become the most important port and energy hub in the Eastern Mediterranean, argues Reginos Tsanos, CEO of Lavar Shipping and Chairman of the RPT Group. In the following interview, Mr. Tsanos states that the Government must enhance the shipping industry.
Why should a shipping company set up in Cyprus? What are the benefits?
In light of the crisis in Greece, in particular, we are seeing renewed interest in the establishment of shipping companies in Cyprus. Shipping is, indeed, one of Cyprus’ primary industries and it is safe to say that, as a country, we have developed our expertise in this field over the years. Allied to this expertise, there are a number of reasons that make Cyprus an ideal location for setting up a shipping company, and I will highlight what I consider to be the most important. Firstly, in shipping terms, our flag carries a lot of credibility, so there is great commercial benefit in that sense. Secondly, there are the benefits of the recently introduced tonnage tax scheme, which offers favourable tax incentives. Thirdly, Cyprus is a signatory to a large number of double taxation treaties which carries additional advantages for companies based here. Fourthly, the supporting infrastructure – particularly the highly developed services industry – offers companies the support network they need, particularly in the early stages. This all-encompassing package is what we offer through the RPT Group, building on the success and expertise of our flagship company, Lavar Shipping.
Cyprus has managed to retain its impressive position in the rankings as the 10th largest ship registry in the world and the largest third party ship management centre in Europe. What can the country do to ensure that its success is not overtaken by other nations?
I believe that, having spoken out on numerous occasions, we are starting to be heard. Cyprus punches above its weight in shipping terms, and it has the potential to become the “flagship” of Cyprus’ economic growth in the future. We need to ensure that the quality of our services remains consistent, adhering to the highest level of standards used for vessel inspection, and to be compliant with all international regulations and conventions.
In what ways can the Government enhance the shipping sector?
Let me be clear: the Government must enhance the industry. The latest figures show that shipping contributes almost 7% to Cyprus’ GDP. However, it must be said that the Government has been proactive in its attempts to support the shipping industry. At the recent Maritime Cyprus conference, the Minister of Transport, Communications and Works announced plans that include the restructuring of the Department of Merchant Shipping and a series of new promotional campaigns, as well as tax incentives.
In addition to these, the time has come to establish the much-touted position of an Under-Secretary for Shipping. We also need to modernise the maritime administration in Cyprus, and enhance its cooperation with other professional organisations, institutions and entities.
Finally, working diplomatically towards the lifting of the illegal trade restriction by Turkey is a key task for the Government. All parties stand to benefit from a lifting of the ban – Cyprus, the European Union, and Turkey – and these benefits must be highlighted, even more so within the context of the ongoing negotiations for solving the Cyprus Problem.
What is your view on the proposed commercialisation of Cyprus’ ports?
We all accept that there is a pressing need to upgrade the infrastructure of our country’s ports. This will give the industry a push in the right direction and lead to an increase in their economic and commercial activity. However, it will only be successful if implemented as part of an overall strategy.
Over the years we have been involved in a number of attempts to attract major shipping lines to utilise both the Limassol and Larnaca ports as transit hubs. Ultimately, the lack of appropriate infrastructure left us exposed to competition from other countries. The fact is that the Cyprus Ports Authority has displayed a lack of foresight and an inability to plan ahead, as well as a hesitancy to deal with ongoing labour disputes and the unions’ inflexible position on liberalising the costs of handling goods.
Reforms are necessary and paramount to progress. The Expression of Interest phase launched by the Ministry of Transport, Communications and Works is only the first step towards re-establishing our competitive advantage. However, this is not a short-term process. The longer-term potential for the industry is huge and will help build all services that are dependent on and connected to shipping. The infrastructure inside and outside the port will be significantly improved, and we are certain that it will attract a lot of transit business.
What potential does shipping in Cyprus have?
Our position on this is very clear. The discovery of hydrocarbons in the Eastern Mediterranean offshore Cyprus, Israel and most recently Egypt, can unlock Cyprus’ most important advantage – its geographical location. We are in full agreement with the Cyprus Shipping Chamber’s recent call on the Government to establish the framework within which the oil and gas sector will operate. Not only from a legal perspective but also in terms of putting the necessary infrastructure in place.
Cyprus can play a central role in facilitating regional development in the energy sector, and has what it takes to become the most important port and energy hub in the Eastern Mediterranean. The Vasiliko Oil Terminal is a case in point. We have already seen how it can provide a further boost to the shipping industry, and we have set about establishing strategic partnerships that look set to lead to new and vibrant projects in the not-so-distant future.
Today, Lavar Shipping’s sister company VTS Vasiliko Terminal Services is offering services to the VTTV Jetty including pilotage, towage, and mooring through its highly-qualified and professional crew. Operating two new ASD tugboats – VTS Kyrenia and VTS Ammochostos – this represents a significant investment on our part, unique both to Cyprus and the region, which are well-placed to provide services to energy companies active in the region’s EEZ.
Can you tell us a little bit about your company’s operations?
Since our establishment 50 years ago, Lavar Shipping has evolved into a multi-faceted organisation, offering traditional and specialised maritime services to the local and international industry. As the flagship company of the RPT group, it can also draw on the breadth of expertise of other companies in the group, offering a higher degree of integration across different sectors.
We represent a number of prestigious clients, from high-profile ship owners and global oil companies to commercial representatives and traders. We have positioned ourselves as the main shipping agent at Cyprus’ ports and terminals, and recently we have seen an increase in our core activity with the number of calls expected to exceed 300 vessels on an annual basis.
Our highly experienced team also provides a vast range of services ranging from forwarding and husbandry to technical support while, more recently, we have built up our specialisation in the field of oil and gas logistics. Lavar Shipping also plays an important role in ship-to-ship operations performed off Limassol Port limits and at designated points of anchorage.
