Nicosia (The Brussels Morning Newspaper) – The European Commission has urged that Cyprus refund almost €69 million which had been paid in assistance for the crisis-ridden liquefied natural gas (LNG) terminal project at Vasiliko, the Cyprus energy ministry stated.
What Irregularities Were Found in the Vasiliko LNG Project?
The ministry reported it had received a letter from the European Commission which documented “possible irregularities which occurred during the evaluation period of the tender” for the construction project. “These issues concern the evaluation criteria of the China Petroleum Pipeline Engineering Co consortium, Metron Energy Applications SA, Hudong-Zhongua Shipbuilding Group and Wilhelmsen Ship Management Limited,” they said.
What Are the Alleged Violations in the LNG Terminal Project?
The China Petroleum Pipeline Engineering Co consortium and Metron Energy Applications SA together created the CPP-Metron Consortium (CMC) and were liable for the terminal’s building until tearing up their agreement with the government on July 18.
The ministry stated the letter “alleges two substantive violations”, the first being the standards for awarding the tender to the above-listed parties in December 2019, and the second being the signing of the bilateral contract upon approval of an additional €25m in budget in June 2022. As a result, they stated, the EU commission has demanded that the Cypriot administration repay exactly €68,608,438.46, which was the same amount which had been spent by the commission on Cyprus’ Natural Gas Infrastructure Company (Etyfa).
This money had been delivered as part of the European Union’s “Cyprus Gas 2 EU” project, which was documented as an EU “project of common interest” and had been supported by the EU to the tune of €101m.
How Is Cyprus Responding to the EU’s Refund Demand?
The ministry stated they would respond to the EU Commission’s letter within 30 days, and added that “the government’s focus remains the defence of the Republic of Cyprus’ interests and it is helping the ongoing investigation in every way to this end.”
They added that they are operating “in full cooperation with the European authorities” and have done so “since the first juncture, by the strict instructions of [President Nikos Christodoulides],” to have a “full investigation of the facts”. They stated they would “demonstrate zero tolerance for possible illegal actions”.
How Is the European Public Prosecutor’s Office Involved?
The European Public Prosecutor’s Office (EPPO) had on Thursday publicly reported the opening of an inquiry into possible procurement fraud, misappropriation of EU funds, and immorality related the Vasiliko LNG terminal. The project currently finds itself at a dead end, CMC having terminated its agreement with the government for the terminal’s structure on July 18. They had blamed Etyfa for “bullying” and leaving CMC to work “without reasonable or timely payments” for years.
What Role Did Etyfa Play in the Project’s Issues?
They said that Etyfa and its consultants on the project “had little to no applicable experience in any of the essential components for delivering a project of this nature: oil and gas, engineering, procurement and construction works and conversion of an LNG carrier to a floating storage regasification unit.”
“The position has become untenable. Defiant to the promises that were pushed by the [energy] minister in March, CMC has still not accepted any payment whatsoever for its work in 2024.
“That is but the latest failure in a four-year history characterised by illegal withholdings and delayed payments. No contractor can be anticipated to work indefinitely on credit. That was not the deal that CMC signed up to. It was not the deal that the EU decided to fund,” they stated.
