Our View: Further proof Cyprus authorities not up to challenge of creating LNG terminal

The colossal ineptitude of the authorities in their ongoing efforts to import LNG is still on show. According to the progress report given by new Energy Minister Michalis Damianos to the House energy committee on Tuesday, the only progress was that the government was in the process of returning €67 million of funding received from the EU for the disastrous LNG terminal in Vasiliko.

The money, which had been granted by the European Commission’s Climate, Infrastructure and Environment Executive Agency, would be deducted from other funds allocated for Cyprus and some cash would also be paid. The Commission’s demand for the return of the money was a result of gross irregularities in the tenders’ procedure, for which there was only one tenderer – a Chinese consortium that had no experience in building LNG terminals. The European Public Prosecutors Office is also investigating potential corruption.

What is worse is that nobody has a clue when the Vasiliko project will be completed or how much this would cost. Damianos said he was in no position to give a timeframe and neither could Technip, the consultants hired by the government at a fee of €10m to advise the way forward. The ‘gap analysis’ that was prepared by Technip and describes the status of the work of the LNG terminal was being assessed by Etyfa, the state’s natural gas infrastructure company which owns the project and had been dealing with the Chinese consortium.

Etyfa, like Defa (the Public Company for Natural Gas), which managed the tenders’ procedure were as much a part of the problem as the Chinese contractor. That these two organisations are still involved in the effort to import LNG, despite their dismal record of failure, cannot inspire confidence. Defa, Etyfa and the Anastasiades government, through a long catalogue of blunders, were the main contributors to this costly disaster and the two are still involved.

Their record, which will eventually cost the taxpayer a few hundred million euro (the dispute with the Chinese consortium is at arbitration court), should automatically have excluded them from any further involvement in this project. Can the government trust Etyfa to make a reliable assessment of the ‘gap analysis’? Or will it take decision that would delay the import of LNG by another five years?

The Chinese consortium quit the project in July 2024, four-and-half years after the awarding of the contract. Eighteen months later, Etyfa, Defa and the government still have no idea what to do. The possibility of cooperation with the United Arab Emirates is on the table said Damianos but discussions were at an early stage. Perhaps giving the project to another state might be the only way to ensure its completion, as the Cyprus authorities have proved, beyond any doubt, that they are not up to the challenge.