NICOSIA – Cyprus stands at a critical juncture as the ambitious project to construct a crucial Liquefied Natural Gas (LNG) terminal in Vasiliko faces severe setbacks, marked by substantial financial losses, the potential forfeiture of significant European Union funding, and ongoing investigations into alleged corruption. The latest progress report, delivered by the new Energy Minister, Michalis Damianos, to the House energy committee, painted a bleak picture of a project mired in a protracted crisis, with no discernible timeline or cost estimate for its eventual completion.
The genesis of these profound challenges appears to lie in deeply flawed tendering procedures. A mere four-and-a-half years ago, a contract was awarded to a Chinese consortium that, crucially, possessed no prior experience in constructing such complex energy infrastructure. This solitary bid, devoid of any competitive pressure, has since unravelled spectacularly. The consortium officially withdrew from the project in July of this year, leaving a void that has persisted for eighteen months without a clear resolution. The European Commission's Climate, Infrastructure and Environment Executive Agency has consequently initiated proceedings to reclaim €67 million in EU funds allocated for the terminal, citing unacceptable irregularities in its development.
Adding to the project’s woes, the European Public Prosecutors Office is actively scrutinising the circumstances surrounding the terminal's procurement, investigating potential instances of corruption. This probe casts a long shadow over the competence and integrity of the state-owned entities entrusted with its management, namely Etyfa and Defa. Their track record has been described as dismal, further eroding public confidence. The dispute with the now-departed Chinese consortium is currently being adjudicated through arbitration, a process that has further protracted the project's stalemate.
In an effort to chart a path forward, the government enlisted the consultancy firm Technip, at a cost of €10 million, to conduct a comprehensive "gap analysis." Etyfa is now in the process of evaluating the findings of this analysis, a step that highlights the extent of the strategic vacuum the project finds itself in. Meanwhile, preliminary discussions are reportedly underway with the Government of the United Arab Emirates, exploring avenues for potential collaboration. However, these talks are at an embryonic stage, offering little immediate solace to the project's protracted delays.
The ramifications of this protracted debacle are far-reaching and financially devastating. Taxpayers are now bracing for the prospect of absorbing hundreds of millions of euros in additional costs. The loss of EU funding represents a significant blow, not only financially but also to Cyprus's credibility within the Union. Public frustration is palpable, fuelled by the recurring pattern of inertia and failure on vital infrastructure initiatives, a characteristic that has unfortunately come to define the administration of the Anastasiades government and its predecessors. The potential for a further five-year delay in securing LNG imports looms large, underscoring the critical need for decisive leadership and a swift, transparent resolution to this protracted saga. The efficacy and trustworthiness of Cyprus's public sector institutions are now under intense scrutiny, with the Vasiliko LNG terminal serving as a stark emblem of systemic shortcomings.