Nicosia to respond to EU’s €69m LNG refund request by September

By the first week of September Nicosia will respond in writing to Brussels regarding the latter’s request to be refunded for the €69 million in EU grants already disbursed for the troubled LNG project, the energy minister said on Thursday.

The government had received a letter from the European Commission in late July, asking Cyprus to return the amount amid serious questions – including potential corruption – surrounding the LNG contract awarded back in December 2019. Per procedure, Nicosia was given some time to make its formal reply.

This will happen within the first week of September, according to the energy minister. George Papanastasiou also said that so far Cyprus has not returned the €69 million.

“Nothing has been returned, nothing is over,” he added.

At stake are not only the funds already disbursed to Cyprus for the LNG project, but also the total €101 million in grants pledged – of which the €69 million is a part.

Brussels made its move soon after the European public prosecutor’s office announced the opening of an probe into possible procurement fraud, misappropriation of EU funds and corruption related to the Vasiliko LNG terminal.

As for the European Commission itself, it has alleged potential wrongdoing or malfeasance on two points: the criteria for awarding the tender to the Chinese-led contractor, and the signing of the bilateral agreement upon approval of an additional €25 million in funding in June 2022.

Papanastasiou reiterated that the consortium should never have been awarded the contract.

On the state of the LNG project, the minister said that Etyfa – the natural gas infrastructure company, owner of the project – is currently taking an inventory of the materials at the jetty in Vasiliko and on the ‘Prometheas’ regasification ship.

The energy ministry has meantime received legal advice that Etyfa should not continue using the services of the subcontractors who previously worked for the Chinese-led consortium. Instead, a call for tenders must be fast-tracked seeking new subcontractors from scratch, for the remaining construction works at the land-based facilities at Vasiliko.

Regarding the regasification vessel, still stranded in Shanghai, Papanastasiou said they continue their efforts to get physical possession of it.

“At the moment, talks are underway between the two parties, Etyfa and the Chinese consortium,” offered Papanastasiou.

He pledged again that the government is determined to finish the project.

The CMC consortium tore up their contract on July 18, citing financial and other disputes with the Cypriot side. The two parties are also facing off in arbitration proceedings in a London court.

Asked about accountability for the LNG debacle, Papanastasiou merely referred to the president’s earlier remarks.

“Rather than dwell on the past, I suggest we look to the future…and the future is that Cyprus urgently needs natural gas, as it’s the only way to bring down the cost of electricity generation from fossil fuels.”