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Cyprus: Government may terminate LNG terminal contract

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Energy Minister George Papanastasiou hinted Thursday the government may terminate the contract with the CPP consortium with the contract to build the liquefied natural gas (LNG) terminal at Vasiliko.

His remarks came after a closed-doors session of the House audit committee, which again discussed the delays in the LNG project.

The minister stressed that the government still wants to overcome any problems and disputes with the contractor so that the LNG terminal comes online, even if belatedly. Switching to natural gas for power generation would cut carbon dioxide emissions by 30 per cent – saving the island tens of millions of euros in greenhouse gas penalties.

But if an understanding with the Chinese-led consortium is not possible, Papanastasiou said he does not rule terminating the contract.

He telegraphed “developments” in the coming days.

The LNG project will either be completed with the current contractor, or “other solutions” will be sought.

It’s understood the latter reference meant finding another contractor to finish the job.

For his part, also appearing in parliament, former energy minister Giorgos Lakkotrypis (March 2013 to July 2020) maintained that the awarding of the contract to the Chinese consortium was deemed to be above board.

“The problem is not the contract, the issue is financial,” he noted.

The contractor meantime has halted all work at the land-based LNG facilities at Vasiliko, citing the non-payment of invoices by Cyprus. Separately, the consortium is seeking a reported €200 million from Cyprus in arbitration proceedings in London.

The government says it pays the invoices on time.

A special report recently released by Auditor-General Odysseas Michaelides flagged the delays in the LNG project, and cited violations of public contracting that could even entail criminal liability.

According to the auditor-general, the whole project should have taken 22 months to complete. Also, while the contract was awarded for €500 million, to date expenses have surpassed €542 million.

It was back in December 2019 when Cyprus signed the contract with the consortium. The contractor has since submitted four delivery timetables – September 2022, July 2023, October 2023 and lastly July 2024.

In another twist, meanwhile, it appears that classified official correspondence concerning the LNG affair got leaked to the media.

Commenting on this on Thursday, Attorney-general Giorgos Savvides stated that the unauthorised disclosure or reproduction of classified material is a criminal offence, punishable by up to seven years jail time.

The attorney-general was referring to a report published by Phileleftheros on Thursday. The newspaper revealed that a day earlier the energy minister had sent a letter to House Speaker Annita Demetriou, and to MPs on the House audit committee.

The letter was marked “Confidential”. In it, the energy minister notified the recipients that, if Cypriot officials do not cease and desist from leaking information regarding the arbitration case in London, the Chinese-led consortium would take legal steps against the Republic of Cyprus.
The parties to the arbitration – Cyprus and the consortium – are bound by confidentiality not to discuss the case.

Somehow Philelefheros got a hold of the minister’s letter and revealed its content, despite the letter being tagged as “Confidential”.
Source: Cyprus Mail

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