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Our View: Cyprus’ energy policy a mess of epic proportions

editorial construction has stopped at the vasiliko lng terminal

Nothing exemplifies the amateurishness and superficiality of our state services as well as the country’s energy policies of the last 15 years. Policies – if you could describe the catalogue of ineptitude in this way – that have cost the taxpayer dearly and seem destined to carry on doing so for years to come.

When populist or corrupt politicians, a state monopoly, self-serving union bosses and technocrats of limited abilities join forces to formulate the country’s energy policy the result can only be an extremely costly fiasco.

In the last 20 years there have been more than 10 attempts to bring natural gas to Cyprus. All have failed because of a combination of political expediency, union interference, corruption and incompetence. Now, the latest attempt for the creation of a LNG terminal in Vasiliko, shaped by a combination of the above, during the Anastasiades presidency is in the balance.

Energy Minister Giorgos Papanastasiou told the legislature on Thursday that the government was caught between a rock and hard place. Either the government finds a compromise with the consortium led by the Chinese company CPP, which has gone to the court of arbitration in London seeking an additional €200 million for the project or it terminates the contract and looks for another contractor. Any compromise would involve paying a sizeable part of the amount being demanded by CPP, which has now stopped all work at the terminal, while terminating the contract and giving it to a new contractor could be even costlier.

This is what happens when the biggest ever infrastructure project is awarded without competitive bidding, to a company with zero experience in building LNG terminals or in converting LNG carriers into Floating Storage Regasification Units, by a political decision of the president. His excuse at the time was that Cyprus could not afford the delay of another tenders’ procedure, which is rather ironic considering the Vasiliko project was meant to have been completed in September 2022 and is unlikely to finish before the end of this year if a costly compromise is found with CPP.

Meanwhile, the taxpayer is still paying the big salaries of staff at Natural Gas Public Company, Defa, and its subsidiary Etyfa, the company for natural gas infrastructure, which was dealing with CPP. The CPP claims for additional payments are partly based on the alleged failure of Etyfa to provide requested information promptly. Now, the electricity authority, which has a 30 per cent stake in Etyfa, is demanding its investment of €43m is returned, as it is a state monopoly and can do as it pleases. Defa is also a state monopoly which has failed in its mission to ensure the supply of natural gas.

It is a mess of epic proportions, but perfectly in line with the absence of any plan which has meant policy is improvised along the way. For years the government had been setting up trilateral energy alliances, talking about taking natural gas to Greece via the East Med pipeline, to Egypt’s LNG plants while more recently Papanastasiou spoke about bringing gas to Vasiliko from Israel’s gas fields (this while the terminal was being built).

On Sunday night Papanastasiou will travel to Egypt for discussions on natural gas and Egypt’s terminals; he told Antenna TV that the electrical connection with Egypt will also be on the agenda. This, while the government is considering investing in the Great Sea Interconnector that would connect the power networks of Cyprus, Israel and Greece.

Should we also mention the RES that started with the unsightly, uneconomical wind farms, which were a licence for the contractors to print money, or the subsequent promotion of photovoltaics with no provision ever being made for power storage that would have significantly reduced carbon emissions.

This ineptitude and improvisation masquerading as policy means we will carry on paying some €300m every year in carbon emission fines, a cost that is passed on to every household’s and business’ electricity bills. And this does not take into account the bill for the Vasiliko terminal fiasco. Despite the constantly rising costs, there is still no clear energy policy.

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