Cyprus faces multi-million Euro losses as major development projects collapse

Cyprus is facing significant financial and logistical challenges following the abrupt termination of contracts for major infrastructure projects, with some cases likely to lead to costly legal battles.

According to a report by Kathimerini's Doria Yiannakou, discontent is growing among the public as several high-profile projects—meant to stimulate economic growth and modernization—have either stalled or failed to meet deadlines, resulting in contract terminations that could cost millions or even billions.

The primary projects affected include the Vasilikos gas terminal, the Paphos-Polis highway, the Larnaca port and marina, and the Liopetriou River development. The Larnaca port project, valued at €1.2 billion, has been fraught with delays, and contractors are now clashing with the government over unmet timelines and potential termination proceedings. Additionally, the Vasilikos gas terminal, estimated at €500 million, has yet to reach even half of its expected progress, despite its intended completion by September 2022.

The Paphos-Polis highway project has similarly encountered severe delays, with the contractor completing just 21% of the work by this month. Disputes arose over inadequate excavation materials and a shortage of suitable aggregates, leading the contractor to argue that the government’s provisions were insufficient.

The collapse of these projects has prompted the Cypriot government to consider amending procurement regulations, a move intended to improve oversight and reduce bureaucratic delays that have hampered project completions in recent years. Lawmakers and agencies are looking to streamline the responsibilities of contractors, coordinate between departments more effectively, and enhance transparency in contract management.

As legal cases begin to form, the government may face additional financial burdens from contractor claims and compensation demands. These high-stakes disputes underscore the pressing need for regulatory reform to prevent similar issues in future projects.