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14 June, 2024
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Vasiliko energy project now under EU scrutiny

Audit unearths dubious decisions in Vasilikos venture, sparks investigation Into €260M mess

Apostolis Tomaras

Apostolis Tomaras

The procedures and decisions related to Cyprus' largest energy project in Vasilikos are gaining significant attention. According to information from the Audit Office, a file is being prepared to file a complaint with the European Public Prosecutor's Office (CPPO). As per information received by "K," the file is expected to be submitted to the CPPO around mid-March, and the complaint will concern the events preceding the project's award to the Chinese consortium and the circumstances under which the Anastasiades government decided to grant the project to the Chinese.

Competent sources of "K" indicate that the file includes the memorandum of the independent Cyprus Hydrocarbons Association to the Parliament dated February 14, 2024, revealed by "K" in the printed edition last Sunday (03/03/2024). The content of the memorandum is assessed as serious, providing insight into events from 2016 until the announcement of the tender results. The file claims to contain other evidence potentially substantiating concerns about the procedures followed by the Anastasiades government, which has created numerous problems, risking the project's completion by the contractor consortium.

If a complaint is made to the European Public Prosecutor's Office, investigations will be launched to clarify whether irregularities occurred in a project for which the Republic of Cyprus received €110 million in funding from the European Commission and a €150 million loan from the European Investment Bank with state guarantees. The SYL memo argues that the Anastasiades government chose the most expensive, complex, and time-consuming option among four terminal proposals. It decided to build a complex and costly platform (Jetty), disregarding consultants' instructions for separate contracts and tenders. This decision derailed the consultants' philosophy, ultimately involving converting an old vessel into an FSRU, building a 1.5km platform, and operating the terminal under one bid, justifying it as crucial for EU grant retention and being under the PCI (Project of Common Interest) heading.

As evident from the SYL memorandum, the government commissioned an international consultancy firm (Gaffrey Cline & Associates) to prepare a study on the methodology for introducing VAT. The SYL argues that the government did not consider the study, costing €250 thousand. The consultants proposed the most economical and practical solution: conversion by chartering an FSRU or reinstalling an existing FSRU using Monopol mooring, avoiding a costly JETTY worth millions, which was eventually promoted, and installing an undersea pipeline to STERIA.

The Vasilikos terminal is expected to be debated in Parliament, fueling public debate on how, six years after construction began, the Republic of Cyprus risks legal issues, delaying the project's completion and potentially increasing the overall budget. The side effects extend beyond the consortium and ETYFA, the terminal owner, as a criminal investigation may lead to a new cycle of public tension with impacts beyond Cyprus's geographical boundaries, similar to previous issues.

[This article was translated from its Greek original and edited for brevity and clarity]

Cyprus  |  energy

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