The audit office said on Friday it was going to report Cyprus’ long-delayed project for the creation of a liquefied natural gas arrival terminal at Vasiliko to the European Prosecutor’s Office as EU funding was involved in the debacle, now years delayed with no sign of completion.
The management of the whole project has been “tragic”, according to a 150-page report. The audit office said the project has so far cost the taxpayer €542 million due to the increased cost of delays in a process riddled with inaccuracies and dodgy shenanigans that could even involve criminal responsibility.
The project promoter is Etyfa, a subsidiary of Defa, the natural gas public company. The audit office accuses the body of pandering to the contractor instead of claiming compensation for the delays endured.
“All the findings, which are recorded in this report, unfortunately confirm in the worst way, the concerns and reservations of our service, which we expressed from the first moment to all the competent bodies about a project of such large of scope and national importance whose costs, direct and indirect, exceed the amount of €542 million plus VAT,” the audit office said.
“The intention of our office is to inform the European Public Prosecutor’s Office (Eppo),” it added.
“Other serious findings emerged from the control carried out by our office, which may involve disciplinary or criminal responsibilities, including, irregularities on the part of the board of directors of Etyfa in the approval procedures… as well as irregularities… in the approval procedures of subcontractors.”
The Chinese-led consortium with the contract to build the liquefied natural gas (LNG) terminal last year filed a new timetable, promising to deliver the project by July 2024. The contract was awarded in 2019 with a 24-month deadline for completion.
The LNG terminal is to include a floating, storage and regasification unit (Fsru), a jetty for mooring it, a jetty-borne gas pipeline and related infrastructure.
Since the signing of the contract in December 2019, the contractor has submitted four delivery timetables – September 2022, July 2023, October 2023 and now July 2024.
The €500 million project, now costing millions more, according to the audit office had received a €101 million grant from the EU under the Connecting Europe Facility (CEF) financial instrument. The rest of the financing came from the European Investment Bank and the European Bank for Reconstruction and Development.
The Fsru – the purpose-built vessel earmarked to convert imported LNG into gaseous form so that it can be fed into the Vasilikos power station to generate electricity – had presented the biggest stumbling block.
Last year, Energy Minister George Papanastasiou had said the vessel was still in dry dock at Cosco’s shipyard in Shanghai. At the time, the ship vessel had been expected to arrive in Cyprus sometime in July 2023. That was then delayed until October 2023 with a four-week voyage. The ship is still not here. The audit office report said it had failed testing runs.
“We doubt, on the one hand, whether the ship will reach Cyprus, and whether this will be possible if will not present any functionality and safety problems and, on the other hand, if the project as a whole will be delivered on the revised date stated by contractor,” the report said.
“And this, always under the condition that the contractor will not come back with new undocumented claims [of delays], which the involved agencies will take care of once again to satisfy under threat of abandoning the project.”
However, unconfirmed reports on Thursday on the website offshore.energy.biz said the ship, named the Etyfa- Prometheas was officially handed over to Cyprus by Cosco in Shanghai the same day. The ship is 296 metres long and 46 metres wide and can stores 137,000 cubic metres of LNG.
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