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Our View: Natural gas body Defa a waste of taxpayers money

THE NATURAL Gas Public Company (Defa), was set up 10 years ago by the state, in order to buy natural gas. It is a state-owned company, with the monopoly on natural gas made available to the country. The idea was that Defa would buy LNG from abroad, de-liquefy it and supply it to power stations through pipelines it would set up.

Its mission, during the initial phase of its operation was: “To secure sufficient natural gas supplies, at the lowest possible prices, to cover the needs for electricity power generation (Phase “A”) and subsequently to also supply industries, hotels and households. To develop the necessary GAS NETWORK (sic) infrastructure. The gas network will initially consist of 3 pipelines connecting the Gas Import Hub with the three existing downstream Power Stations.”

After 10 years of operation, Defa is still nowhere near fulfilling its mission, which it states on its website, without the slightest hint of embarrassment over this spectacular failure. Executives have come and gone, the board has changed but one thing remains constant – it has not sold a cubic foot of gas. The taxpayer has been picking up the bill for its operation for 10 years, and in this time all that Defa has done is to fail supply power station with natural gas.

The Electricity Authority of Cyprus (EAC), could have switched to gas at its power stations almost 10 years ago, cutting the cost of production and reducing carbon emissions, but it was prevented from buying natural gas by the political parties which decided it would be better if a state-owned company bought the gas and sold it to the Authority. Results show that it was not a very smart plan. If the EAC was a private company, it would have sued the state demanding hundreds of millions in compensation for this restrictive practice.

Now there is another dispute between the two, according to Politis. The EAC needs to know whether to invest some €50 million in equipment for the Vasilikos power station, which would be necessary if Defa cannot supply it with natural gas in 2020, because this is when stricter, anti-pollution regulations are to be introduced by the EU. For the equipment to be installed by 2020, the tenders’ procedure would need to start in the next month or two.

Of course, Defa is in no position to give a definite answer. At present, it is in the process of holding a competition to find consultants that would draft the tender documents for the supply of gas and the creation of the necessary infrastructure for distributing it. Given the pace, at which Defa works, it might still be arranging the tenders’ procedure in 2020. The EAC will have to spend the €50 million, because Defa might need another 10 years to fulfil its mission.



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