Cyprus Mail: News Articles in English, 00-02-19

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From: The Cyprus Mail at <http://www.cynews.com/>

Saturday, February 19, 2000

CONTENTS

[01] Desalination D-Day comes and goes

[02] Failure to secure pre-election date for Athens listing overshadows BoC profits

[03] Disappointed investors drive stock market down

[04] Plane makes emergency landing in Istanbul after leaving Larnaca

[05] Disy insists on electoral threshold

[06] Koshis: most crime committed by drug users

[07] Lellos slams ‘outdated approach’ to local government

[08] Crisis looms in fuel price 'war'

[01] Desalination D-Day comes and goes

THE PROMISED water "D-day" came and went yesterday with the government failing to take a final decision on how to deal with the island's worsening water crisis.

No decision came out of a top-level emergency meeting called to find a solution to the impasse created by local residents' staunch opposition to government plans to build more desalination plants.

Earlier in the week, Government Spokesman Michalis Papapetrou had billed the meeting - called and chaired by President Clerides - as decisive for the government's drought-battling strategy.

State plans to tackle the drought by building more desalination plants at Zakaki and Larnaca have been stalled by opposition from local residents, court actions, and parliament's refusal to approve relevant funds.

The government yesterday postponed taking a final decision on the desalination issue till next week's Cabinet meeting.

Agriculture Minister Costas Themistocleous had the job of explaining why no decision had been taken at yesterday's water `war council.'

He said two new possible sites for desalination plants had been proposed and the government wanted to look at these before taking the plunge.

Paralimni municipality was offering to "host" a plant and the Electricity Authority (EAC) was suggesting a unit could go up near the new power station at Vassiliko. Details of the EAC proposal, the Minister said, had only been tabled yesterday morning.

"We discussed all solutions for all of Cyprus," Themistocleous said after the Presidential Palace meeting.

"There are the proposals put by the Agriculture Ministry, proposals by local authorities and proposals from the EAC for Vassiliko."

Time was needed for state experts to pore over the new proposals, the Minister said.

"We discussed them all, but because some of these ideas were only put forward this morning it is natural that we should have certain questions which will be answered in the coming days so that we can move with certainty to taking certain final decisions," Themistocleous said.

Themistocleous repeated that the water situation was "tragic," saying there were only 24 million cubic metres of water behind dam walls. At the same time last year, there were 51.4 million cubic metres of water in reservoirs.

Rainfall this winter has only been 46 per cent of average.

The government has already stopped piping dam water to fields from Limassol to Famagusta and Themistocleous warns of further cuts in domestic supply unless more desalination plants are built soon.

But, despite Themistocleous' insistence that desalination is the only way out of the water crisis, no community seems to want a plants in its "back yard".

Zakaki residents have waged a long and dogged battle against state plans to site a plant near the Limassol port.

Zakaki residents fear the plant would lower property values in their suburb and effect swimming along the popular Ladies' Mile beach.

This opposition led the House of Representatives to deny funding for the Zakaki plant last month.

Akrotiri was mentioned as a possible alternative Limassol area site, but residents there too have made clear they won't have it.

Plans for a desalination plant at Ayios Theodoros in the Larnaca district were scuppered by similar opposition from locals.

Construction of the island's second desalination plant, near the Larnaca airport, has been halted by a court action launched by the town's municipality.

Larnaca mayor George Lycourgos has led opposition to the plant, claiming it would destroy the Larnaca salt lake ecosystem.

A Larnaca residents' group is organising a demonstration at the plant construction site for Monday.

The island's one existing desalination plant, at Dhekelia, produces 40,000 cubic metres of fresh water a day.

Also yesterday, Themistocleous announced that the UN Food and Agriculture Organisation (FAO) was to fund a $284,000 year-long study into the state of the island's water reserves. The study, which the Minister said would be "significant," will be carried out by foreign experts.

Saturday, February 19, 2000

[02] Failure to secure pre-election date for Athens listing overshadows BoC profits

THE BANK of Cyprus yesterday reaffirmed market expectations of excellent 1999 results with a 119.3 per cent increase in its pre-tax gains in 1999 but got a lukewarm reception from investors expecting announcements of when it would list in Greece.

The bank, the island’s largest, posted pre-tax gains of £100.1 million on an increase in profitability from insurance and brokerage operations and a surge in the value of realised investments through the Cyprus Stock Exchange.

While analysts gave the results the thumbs-up, some said investors were disappointed that the bank had not given a firm date for the debut of its stock on the Athens Stock Exchange.

That was reflected in the share performance on the bourse. The stock retreated five cents to close at £10.10, after falling as low as 30 cents at one point.

The bank said it expected to secure its listing in Athens in May, and not as early as March as it had initially planned.

BOC submitted its listing application in December.

However, it is one of 200 other companies whose applications the Greek authorities have to process.

"We all expected good results and in some cases the results were better than we expected. But the whole issue was overshadowed by the Athens debut, " an analyst at a Nicosia brokerage said.

But BOC chairman Solon Triantafyllides dismissed speculation that a delay was a setback for the bank.

In a defensive mood, Triantafyllides told reporters that if investors wanted to push the stock down it was their prerogative to do so -- if they knew something the bank did not.

"I think the results are excellent. Some might be disappointed by the listing issue though I can't understand why," he told journalists.

"We are not going into Athens just for the short-term so I don't understand what the significance of it would be if it were March or May. Greek authorities have assured us that the case of the Bank of Cyprus is an excellent one," he said.

Triantafyllides said shares would be listed in Greece after an initial public offering and its strike price would be calculated through book- building.

That involves a process where institutional investors would be invited to bid for the stock using as a reference point the closing level of the bank on the Cyprus bourse on the Friday before the procedure is adopted. Once the mean is calculated, that strike price would be the price remaining investors would pay for the stock.

The offering would be the equivalent of 12 per cent of the bank's share capital, or up to 39 million new ordinary shares with a nominal value of 50 cents.

The issue would be a resounding success, Triantafyllides said confidently.

He rejected market talk that the stock price was under pressure because of a perception that Greek investors found the stock expensive. He was equally dismissive on speculation why the issue was not underwritten.

As a listed company, BOC has no need to underwrite the additional issue of stock, he said. In any case, underwriting the issue would have cost the bank – and ultimately its shareholders -- six million pounds.

"That would have been paying six million pounds without a reason," he said.

Triantafyllides said that the bank planned to branch out into insurance and brokerage activities in Greece, and a full range of banking activities in Australia in September.

It planned to open two branches in Melbourne and two in Sydney, both important centres for the estimated 600,000-strong ethnic Greek community.

"This opens a whole new horizon for us," he said.

Turnover rose to £539.3 million, a jump of 30.6 per cent from £413.0 million the year before. Operating profit rose 103.2 per cent to £132.6 million while profit after tax reached £77.6 million, climbing 149.2 per cent.

The results bring the bank's PE ratio down to below 40 times, compared to 80 last year.

The bank said it would issue a final dividend of eight cents per share, over and above an interim dividend of four cents given to shareholders.

Saturday, February 19, 2000

[03] Disappointed investors drive stock market down

SHARE prices sank for the second consecutive day yesterday in a knee-jerk reaction from investors disappointed at the Bank of Cyprus’ failure to announce a firm date for its long-awaited listing on the Athens Stock Exchange.

The benchmark Cyprus Stock Exchange index was 1.2 per cent weaker at the close, but it was shored up from further losses by last minute buys in the banking sector.

At a closing level of 640.16, the market has lost 1.4 per cent this week, compared to an eight per cent advance for the week between February 4 and 11.

"The announcement of excellent results did not clear a nervous climate for investors and this was reaffirmed by the delay in the listing of Bank of Cyprus in Athens," said a trader.

Traded value reached £29.5 million yesterday on 4,208 trades.

All sectors closed lower, lead by a 16 point drop in investment stocks and a 10.3 climbdown in commercial shares.

Trading was focussed on the banking sector, which ended 0.8 per cent lower after heaving itself up from a significantly weaker open, cutting its losses literally in the last three minutes of trading.

Bank of Cyprus dominated trade with more than one million shares changing hands.

The bank reported its 1999 earnings yesterday with a 119.3 per cent increase in pre-tax gains to £100.1 million.

However, the results, which all analysts said were excellent, failed to inspire investors who had already discounted the earnings and were waiting for some firm news on when the bank would list on the Greek stock exchange.

Bank chairman Solon Triantafyllides said he expected Bank of Cyprus to get a parallel listing in Athens in May. The bank had earlier aimed at floating in Greece before elections there in April.

The prospect of it listing in Athens has been an underlying factor in the surge of the local stock market, which last year alone jumped almost 700 per cent.

Brokers reported some negative sentiment among investors after newspaper reports that CISCO, the Bank of Cyprus's brokerage arm, had been block buying on Thursday in an effort to stop the stock sinking below ten pounds.

"I am on the market and I know for a fact that is not true.... but I got several phone calls from worried investors this morning," one trader said.

Bank of Cyprus shares were losing up to 30 cents at one point in the session, but the stock was shored up in last minute buys and closed at £10.10, off just five cents.

"I think this is a classic case of buying on rumour, selling on fact," said Neophytos Neophytou of United Stockbrokers.

Saturday, February 19, 2000

[04] Plane makes emergency landing in Istanbul after leaving Larnaca

Passengers on Lufthansa flight LH3395 from Larnaca escaped unharmed when their aircraft made an emergency landing in Istanbul following a tyre blow out.

The Lufthansa plane suffered technical problems soon after leaving Larnaca airport, for Frankfurt this morning.

"A tyre blow out affected one of the three hydraulics system of the Boeing 737-500 on take-off and subsequently it was decided to divert the aircraft to Istanbul, where the aircraft landed safely," a Lufthansa statement said on Friday.

"The emergency landing was executed without injury to any passengers who were booked on the next available flight as the long waiting time may have caused possible visa problems if accommodated in local hotels," the statement added, suggesting that Cyprus passport holders would have posed a diplomatic headache to Turkish immigration officials. Turkey does not recognise the Republic of Cyprus.

Turkey’s Anatolia news agency claimed the pilot of the plane opted for Ataturk airport and did not return to Larnaca because he felt the technical facilities there were not adequate, while poor weather conditions prevented him from flying on to Frankfurt. The Ministry of Communications in Nicosia took exception to this report, which it described as "inaccurate". "The installations at Larnaca airport are totally adequate to meet any emergency or forced landing," a ministry statement said in swift response last night. It added: "Lufthansa diverted the plane to Istanbul because it was the closest international airport where passengers could get easy connections to their final destination." The Boeing 737 was carrying 90 passengers and six crew when it touched down on a foam covered runway at Ataturk Airport, after discharging its fuel to lighten the plane.

"As a purely precautionary measure the aircraft was towed to a gate where all passenger disembarked safely," the company statement said.

Lufthansa in Nicosia said that 61 of the 90 passengers purchased their ticket in Cyprus but couldn’t say the number of Cypriots among those travelling.

"Passengers are not checked on departure so there can be no further statement on nationalities," said Lufthansa. As Istanbul was the nearest airport, the Lufthansa pilot signalled to Turkish civil aviation that he needed clearance to land at 6.14am local time.

A Spanish passenger, Ramon Aznar, said passengers were informed of the technical failure half an hour into the flight.

"There was not much panic , but we were all very frightened," he told Anatolia.

Saturday, February 19, 2000

[05] Disy insists on electoral threshold

DISY yesterday held a news conference to unveil the full details of the ruling party’s plan for changing the voting system, warning it would not back down from a controversial proposal to raise the threshold for representation in the House.

Parts of the plan had been leaked to the press on Thursday when Disy met to finalise the proposal and put it to the parties.

It was presented in full to the media by Disy president Nicos Anastassiades yesterday.

The plan includes a suggestion for horizontal voting (allowing voters to cast preference votes across the party lines), the introduction of ten new deputies representing all of Cyprus and a rise in the number of district deputies from 56 to 60.

It also proposed the introduction of summer parliamentary sessions, the allocation of scientists to support House Committee investigations and the automatic registration of all 17-year-olds.

The proposal also suggested that the threshold required by parties to secure a seat in parliament rise from the current 1.79 per cent to 3.4 per cent of the vote.

Anastassiades said the proposal was being submitted in response to public demands for extended choice and for a renewal in the parliamentary election system.

He said he would be meeting with the leaders of the other political parties during the coming week to discuss the proposal but that the one point that Disy was especially adamant about was the threshold, an issue that has incensed smaller parties, who would be squeezed out by the proposal.

The Disy plan comes in the wake of suggestions submitted last week by 14 deputies from across the party spectrum.

That proposal calls for the election of individual deputies instead of their appointment from party lists. It also calls for voters to be bale to cast preference votes across party lines.

Disy's call to raise the election came under fierce attack from junior government partners the United Democrats on Thursday, as well as from opposition Akel. At the last elections, the UD got 3.69 per cent of the vote, only just clear of the 3.4 per cent threshold sought by Disy.

The Green Party, yesterday said that while they were still examining the proposal, they believed the current method was the most democratic.

The present system gives parties the right to appoint deputies of their choice to the House seats depending on the ratio of votes they achieve in the parliamentary elections.

Saturday, February 19, 2000

[06] Koshis: most crime committed by drug users

MOST CRIMES are committed by drug users, Justice Minister Nicos Koshis claimed yesterday.

Speaking after presenting a drug report to President Clerides, Koshis said most burglaries and robberies were carried out by people trying to find money to buy drugs.

"The fact that drugs have found their way into schools and the army, and users of hard drugs such as cocaine and heroin have increased, should worry us all," he said.

He added that his ministry was ready to co-operate with the Defence Ministry to tackle the problem in the army.

Koshis stressed the need for a drug bill to be passed so that "we would have a national policy on drug issues."

He also dismissed calls for the legalisation of soft drugs, saying: "this is not an issue in Cyprus now."

Reacting to media reports on the problem of drugs in the army yesterday, Defence Ministry Permanent Secretary Petros Kareklas said the problem had been blown out of all proportion by the press.

On Thursday, the House Defence Committee heard that a study carried out among 1,935 newly recruited soldiers, found that nine per cent had used drugs in the year prior to conscription.

Kareklas said the army was a reflection of society, and since society has a drug problem the army has it too.

He said his ministry would take all necessary measures to prevent and combat drugs in the army.

Saturday, February 19, 2000

[07] Lellos slams ‘outdated approach’ to local government

UNION of Municipalities president and Nicosia mayor Lellos Demetriades yesterday expressed concern at the way local authorities were being treated by the government.

Speaking at the 17th AGM of the Union of Municipalities yesterday, Demetriades said: "Unfortunately, in spite of all the promises and public statements, from all directions, on the support and strengthening of the local self-governing institution, there is still an outdated and unacceptable attitude towards the local self-governing authorities and their representatives in Cyprus."

In an attempt to clarify his statements, Demetriades gave two examples.

The first was that of the Education and Culture Ministry attempting to expand cultural development in towns and communities without involving local government.

The second was that of the government failing to involve the municipality in the selection of the site for the new House of Representatives. The first choice was abandoned after valuable archaeological remains were found at the site.

But President Glafcos Clerides told the mayors that the government would continue to support the municipalities.

And Interior Minister Christodoulos Christodoulou said a complete plan on local self-government would be presented to the Council of Ministers in the following month.

Also speaking at the AGM yesterday, Christodoulou said the government would be increasing its financial support to the municipalities for 2000.

The Interior Minister added that in 1999, the government had paid £3.5 million in subsidies to the municipalities in addition to £5.5 million to cover the municipalities' debt interest.

Christodoulou said that, following a recent Cabinet decision, £4 million would be given in subsidies to the municipalities to cover obligations from previous years.

He said annual government subsidies to the municipalities had from January 1 risen from 0.4 per cent of the government's net income to 0.9 per cent.

Christodoulou said the figure would rise to one per cent on January 1 2001. The municipalities' proposal for the merging of their debts would also be implemented.

Saturday, February 19, 2000

[08] Crisis looms in fuel price 'war'

CRISIS loomed yesterday as parliamentary parties locked horns with the government over proposed fuel price increases.

The parties refused to back a government proposal to raise petrol, diesel and heating oil prices, forcing the state to look to public coffers to make up the huge gulf between current pump and crude oil prices.

"This type of war between the government and the House of Representatives may end up in a serious crisis," Commerce Minister Nicos Rolandis warned yesterday evening. With barely a fortnight's worth of oil reserves on the island, the cabinet will have to take a decision on the matter when it meets on Wednesday.

Rolandis and Finance Minister Takis Klerides spent the whole day yesterday in meetings with the leaders of the five parliamentary parties in a vain attempt to convince them that the House of Representatives should approve pump price increases.

The parties, united for once, believe the higher cost of crude should not be passed on to the consumer, at least not for the time being. Ruling Disy want the state to subsidise pump prices for the next three months. Main opposition party Akel have not spelled out for how long they want the state to carry the can.

Rolandis suggested the parties' position was irresponsible. "The House cannot say `We do not accept the increases, draw funds from the coffers'," he told the Cyprus Mail.

He warned that digging into public reserves would further increase the state fiscal deficit, widening the gap between the Cyprus economy and the Maastricht criteria and threatening the island's EU accession course. "We will need ,22 million from public coffers, which will increase the deficit by 0.5 per cent," Rolandis said.

But he explained that the parties' stance left the cabinet with very little choice. "The problem is that if we decide to increase prices and the House does not accept this position, it means prices will go back to where they are today," he told the Cyprus Mail. "At these prices the oil companies are not interested in importing -- this will have to be taken into very serious consideration by the government."

Rolandis also said the government did not want to end up on a collision course with the House. Finance Minister Takis Klerides suggested some sort of "compromise" deal might be worked out before Wednesday's cabinet meeting.

After their meetings with the two ministers, the leaders of Disy and Akel seemed confident that pump prices would not go up. Disy leader Nicos Anastassiades said hanging fire on fuel price rises would avoid "negative impacts" on the economy.

Akel leader Demetris Christofias said the price of petrol, diesel and heating fuel did not go down when crude was cheap and so should not go up when crude was expensive.

The price of crude oil has risen in the last year from around $10 a barrel to around $30 a barrel.

© Copyright Cyprus Mail 2000

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