State has ‘minimised’ LNG fiasco fallout

The government has managed to buy time to offer explanations to the EU commission over the LNG project fiasco, Energy Minister George Papanastasiou said on Monday.

Speaking on CyBC radio, the energy minister faced ongoing criticism over the project, fanned last week by the double whammy of the European public prosecutor office’s (EPPO’s) announcement of the launch of an investigation and the EU’s demand for project funds to be returned.

“This government has done all it can to minimise the fallout,” Papanastasiou said.

Countering cover-up allegations, the minister said EPPO’s investigation into possible procurement fraud, misappropriation of EU funds and corruption, which has been ongoing since March, could not have been have been announced sooner by the state as this would have breached the EU’s information-sharing protocols.

The EPPO investigation is also “a completely separate matter” from the decision by the European climate, infrastructure and environment executive agency (CINEA) to request the return of the almost €69 million paid out for the project, from a pledged total of €101 million, he added.

The state had been aware that the European central audit office had agreed with aspects of General Auditor Odysseas Michaelides’ damning report on the project’s irregularities, and that the EU had concluded further investigation was warranted, he said.

Beyond this, however, his ministry had not known until July 24 that CINEA was going to proceed with a demand for a recall of funds. Intense negotiations had been going on for the past three weeks to prepare for the possibility of this scenario and to secure “the right to explain” what had happened, the minister said.

As a result, the state has now gained 30 days to do so.

“In theory the decision can be revoked. I cannot predict the chances of this,” he said.

In terms of practicalities, all efforts are now concentrated on the “worst case scenario”, that is, that the Chinese consortium responsible for delivery of the floating storage and re-gasification unit (Frsu) Prometheas, will deliver it to the natural gas infrastructure company (Etyfa), which on paper owns it.

Re-iterating earlier statements, the minister said the project would somehow continue despite setbacks. It was not clear who within the consortium was putting the brakes on the delivery of the Frsu, Papanastasiou said, adding that efforts were being made to secure the ship.

However, the minister said stakeholders were proceeding with the procurement of an alternate ship for the purpose, a tactic some had claimed as unfeasible.

“We don’t want to be held hostage by [this] property claim,” the minister said.