Government ‘has no plan B’ over Vasiliko LNG terminal

The government “has no ‘plan B’” regarding the stalled Vasiliko liquefied natural gas (LNG) terminal, Energy Minister George Papanastasiou said on Wednesday.

Papanastasiou was speaking at a behind-closed-doors meeting of the House Audit Committee, with arbitration proceedings going on between the Republic of Cyprus and the Chinese-led consortium which is due to build the LNG plant.

He explained that he “would not give the same project today as the Republic of Cyprus to this consortium,” but that completing the project with the current contractor is “the fastest solution”.

“The Republic of Cyprus’ first port of call will be to complete the project with this contractor, unless it shows serious weaknesses or its demands are terribly excessive,” he said.

He said his ministry’s priority is “the future of the terminal, which must be operational as soon as possible.”

He added that the contractor “will not receive a single euro while the process is ongoing”, and that the government “requires the project to be delivered in July 2024 as promised by the contractor.”

This deadline has been set after two previous extensions were given. The terminal was initially supposed to be ready in September 2022, before its deadline was extended to July 2023 and then to October of the same year.

However, Papanastasiou remained optimistic, saying “we are concentrating on making this terminal work.”

He also highlighted the need to import natural gas to be used in conventional power generation at present, saying that if the LNG terminal existed today, the price of electricity would be reduced to around 20 cents per kilowatt hour.

He said he is discussing the matter with the Chinese Ambassador Liu Yantao “on a political level”, given that the contracting company is state-owned.

The ongoing discussions with Liu, he said, are “very constructive”, with a meeting scheduled for Friday with a high-ranking executive from the company who has travelled to Cyprus for consultation on the matter.

Asked if he believes it is possible to complete the terminal by July, he said “we are very close to completion, so long as the contractor wishes it so.

“If the contractor for whatever reason is unwilling or unable to complete the work, they should say so, so Cyprus is not held captive by the contractor’s weaknesses.”

At the meeting, it was noted that former Energy Minister Giorgos Lakkotrypis, who served under former President Nicos Anastasiades, and former head of the Natural Gas Public Company (Defa) Symeon Kassianides were both not present at the meeting, despite plans having been afoot since February to summon them to a meeting.

Committee chairman and Diko MP Zacharias Koulias said he has “absolute confidence” that the project will “have a happy ending”.

“Parliament also expects that China will be asked to honour its signature,” he said, saying that “Cyprus is a small state which has friendly relations with China, and Cyprus is a member of the European Union. In honouring its signature here, China will be able to continue to carry out projects in the EU.”

Asked if the matter would be referred to the Anti-Corruption Authority, he said that such a decision will be taken at a full session of the committee after all its meetings on the matter have been completed.

“Certainly, there are considerations where it will go beyond this, but there are so many serious violations that it has to go somewhere,” he said.

Akel MP Irene Charalambidou said she will “insist” that the matter be referred to the Anti-Corruption Authority, adding that what has been heard at the committee was “outrageous, and at the Cypriot taxpayer’s expense.”

She pointed out that former minister Lakkotrypis had, according to Auditor-General Odysseas Michaelides, “failed to mention his relationship” with the parent company of one of the companies involved in the terminal and was subsequently employed by the same company.

“If we are a serious state, given the millions that have already been lost, and the work which has not been done … the least the state can do is initiate criminal investigations,” she said.