ANOTHER government plan for importing natural gas for the EAC power stations was discussed at the legislature on Tuesday when energy minister Giorgos Lakkotrypis appeared before the House energy committee. The latest government plan, of which there have been many over the years, would involve buying liquefied natural gas (LNG), which would be re-gasified on a floating storage and re-gasification unit (FSRU).
This, at least, is the latest plan but considering how many botched attempts to import natural gas there have been, nobody should bet money on it happening. Plans to import natural gas are almost 20 years old, first drawn up during the Clerides presidency. All three governments that followed, including the current one, drew up plans and subsequently abandoned them. The last plan, labelled the ‘interim solution’ because it was based on a short-term contract – until Cyprus would produce its own gas – fell through last year when state-owned Natural Gas Public Company (Defa) failed to agree terms with the successful bidders. Defa felt the asking price was too high.
This highlighted the ineptitude of the company, which should have known that the price for a short-term contract would be high as the supplier needed to justify the investment. Last September, Defa decided to invite tenders from consulting firms to advise it on how to go about the matter. The ‘interim solution’ was shelved, presumably on the advice of the consultants, who recommended the state offered a build operate transfer (BOT) contract that would be on a longer-term basis. Lakkotrypis told the House there would be two contracts – one for the supply of the LNG and one for the FSRU that would process it.
It remains to be seen whether this latest attempt to secure a supply of natural gas will work. Bearing in mind the snail’s pace at which state organisations work and the blunders committed in the process, we cannot be too optimistic about a speedy conclusion – we do not like suffocating time-frames, after all. From 2020 the EU fines for carbon dioxide emissions will increase substantially and this cost will be passed on to the consumer in the form of higher electricity bills, as if these were not high enough already.
The scandal is that our electricity bills would have been much lower if 20 years had not been wasted in botched attempts to secure natural gas. The fact that a state-controlled company was set up to perform the task was a recipe for failure. It would have been much more rational to have asked the private sector to supply the EAC with natural gas directly. But, rational solutions, it seems, are never explored.