European Commission Firm on Cyprus Repaying €68.6 Million for LNG Project

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The European Commission has remained resolute in its demand that Cyprus repay €68.6 million in grants allocated for the liquefied natural gas (LNG) facility at Vasiliko, according to reports from Monday.

These funds represent part of the €101 million total pledged by the EU for this LNG project, which was recognized as a European Project of Common Interest. However, according to Phileleftheros, the European Climate Infrastructure and Environment Executive Agency (Cinea) recently responded to the Cypriot government’s appeal to reverse the decision. The government had formally requested a reconsideration of the refund demand, but Cinea appeared unpersuaded.

Following this response, Phileleftheros noted that the government intends to make another appeal to the EU body, hoping to avoid repaying the substantial amount. The initial refund demand, communicated by Cinea in July, came after both Cinea and the European Court of Auditors identified irregularities in awarding the LNG project tender to the Chinese-led CPP consortium.

The European Commission had previously outlined two major violations in a letter to Cyprus. The first involved the evaluation criteria for awarding the contract to CPP in December 2019, and the second involved a June 2022 agreement granting the consortium an additional €25 million.

Specifically, during the selection process, Cypriot authorities reportedly scored the CPP consortium below the minimum acceptable threshold, which should have disqualified them from the bid. Despite this, the consortium was awarded the project contract. The second issue pertained to the consortium’s request for an extra €25 million to offset higher raw material costs due to the Covid-19 pandemic.

The LNG project encountered a significant setback in July when the CPP consortium unilaterally terminated its contract. Both the consortium and the Cypriot government are now engaged in arbitration proceedings at a London tribunal. Separately, Cyprus is also attempting to secure the release of a floating storage and regasification unit (FSRU) from Shanghai, a critical component for the LNG project.

Source: Cyprus Mail

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