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Tenders review body rejects freeze to LNG terminal

How the LNG plant at Vasilikos might look

THE project for the construction of an LNG import terminal at Vassilikos got a boost this week when the tenders review authority (TRA) rejected a request to freeze the process.

In a ruling on Wednesday, the TRA dismissed a request by contractors Aktor SA seeking to halt the process by which the state was poised to conclude an agreement with a consortium for building LNG import infrastructure.

Aktor SA is part of a consortium comprising China Petroleum Pipeline Engineering Co Ltd (CPPE), Aktor SA and Metron SA, Hudong-Zhonghua Shipbuilding Co. Ltd and Wilhelmsen Ship Management Ltd that won the tender for the construction of a floating storage regasification unit (FSRU), a jetty for the mooring of the FSRU, pipelines, port and other facilities.

The tender was awarded by the natural gas public company (DEFA).

Aktor is the sister company of Helector, facing corruption charges related to waste management plants in Paphos and Larnaca. Helector and all affiliates or sister companies are barred from public tendering for a period of five years, starting from 2016.

Because of this, DEFA subsequently decided to eliminate Aktor from the €500m project. Aktor promptly appealed the decision excluding them.

In addition, Aktor sought interim injunctive relief against DEFA – in effect, it wanted a ruling from the TRA prohibiting DEFA from signing any agreements with the other members of the consortium while Aktor’s appeal is being adjudicated.

The TRA rejected Aktor’s request for interim injunctive relief.

The upshot is that DEFA is now free to continue talks and conclude agreements with the consortium, regardless of whether Aktor is ultimately excluded from the consortium or not – a matter still pending before the TRA.

During the hearings over the interim injunctive relief, DEFA convinced the TRA that any delays could jeopardise the entire project to import LNG.

DEFA pointed out that the Chinese-led consortium – awarded the LNG infrastructures tender -are in talks with another company to purchase an FSRU.

The terms of the FSRU’s purchase need to be locked in by November 20 this year. Failure to do so by that date, it was argued, would derail the entire timetable for the LNG import project, since Cyprus envisages importing the gas by late 2020 to early 2021.

Hearing both sides, the TRA decided that the public interest outweighed the private interests of Aktor.

Delays in switching to natural gas for electricity generation would not only mean longer use of the more expensive diesel, but also Cyprus paying higher carbon allowances for failure to meet EU CO2 emissions targets.

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