Overcoming the challenges on big infrastructure projects by adopting a similar model to Hellenic Republic Asset Development Fund in Cyprus

Written by Efi Thoma, Lawyer LL.M.

By adopting a hybrid akin model to Greece, i.e. the Hellenic Republic Asset Development Fund (“HRADF”), pertaining to the privatization of Cyprus’ major public assets, the following benefits may accrue to the Republic of Cyprus. 

From a financial perspective, the Republic of Cyprus would be eligible to attract some serious investors who would feel safe to invest into big public-private projects and respond to public tenders, by trusting an independent body of international experts, acting in full transparency and in accordance to the rules of private economy, while safeguarding the public interest. Hence, the Cypriot economy could grow exponentially by improving its international image and securing high-quality investments with a positive spillover effect on the country’s real economy.

Furthermore, a budgetary discipline and sound financial management of such joint initiatives in terms of the privatization of Cyprus’ public assets, through the establishment by law of the aforementioned autonomous body, would depoliticize and professionalize the process of the privatization. This would entail that private investors could potentially penetrate other sectors of the economy and deepen their relationships with Cyprus. The beneficial effects of such scale of investments reach into a wide spectrum of industries in the country, creating a domino outcome.

The Greek State has raised so far roughly €10 billion through the sales of the Greek assets since the establishment of the HRADF, on 1 July 2011. Notwithstanding the foregoing, the allocation of the Greek State’s resources, in terms of its public sector’s competent departments and respective employees in order to monitor the implementation of such complex long-term Agreements between the Contracting Authority (State) and the Contractor (private investor) would  lead to serious delays in conjunction with both the daily workload of the public sector and the specific deadlines of the contractually agreed milestones of the privatization procedure. 

It is essential to highlight that despite the engagement of the State’s human resources in such mega projects, the team of experts of an international background is a dire need in order to efficiently guarantee an optimal outcome, facilitate the procedure and raise the level of the key stakeholders managing this category of projects. Independent experts deployed by both parties involved in the privatization of public assets is the right strategy as it ensures an arm’s length relationship in the execution of pertinent Agreements in relation to the disposing of a country’s significant public privatization, including inter alia, the handling of potential delays, complaints, legal implications, and/or other challenges that may affect in any way whatsoever these projects, in a prompt, effective and professional manner, for the benefit of the local as well as the national economy.