Government gas body ‘mismanaged’

Lawmakers on Tuesday complained that the Natural Gas Public Company (Defa) is being mismanaged and operates with subpar transparency, as the organisation sought parliament’s nod for its 2024 budget.

The 2024 budget is the first since Defa changed its legal status from an entity governed by private law to one governed by public law. The organisation’s projected capital and operating expenditures for this year come to €38 million.

By law, Defa is the only entity allowed to import and distribute natural gas in the Republic of Cyprus.

The organisation is asking for 36 new jobs to be opened this year. State funding for 2024 will amount to €12 million – down from €18 million last year.

The budget for 2024 includes a €20.5 million item for ‘investments in subsidiaries’ – the transfer of that amount to the equity of the Natural Gas Infrastructure Company, or Etyfa. The latter is a special-purpose vehicle created to implement the liquefied natural gas terminal in Vasiliko – a project plagued by delays and bickering with the contractor.

According to budget documents shown to MPs, the infrastructures related to the LNG terminal are expected to be completed within 2024.

Once Defa begins importing natural gas, its budget is anticipated to change dramatically. MPs heard that revenues from the future LNG sales are projected at €500 million a year.

The LNG import project has been beset by disputes between the government and the Chinese-led consortium, while construction at the site in Vasiliko has ceased for over a month now.

The contract was signed in December 2019. The contractor had promised to deliver the project by September 2022, then July 2023, then October 2023, and now July 2024.

Parliamentarians were also unhappy with the way Defa runs its affairs. Kyriacos Hadjiyiannis, chair of the House energy committee, said Defa is asking for €38 million but to this day it lacks a job description and an organisational chart – even though this had been promised since the establishment of the organisation.

Hadjiyiannis said Defa officials have been summoned to parliament next week to answer questions relating to funding from the EU plus other issues concerning personnel.

“They [Defa] demand that we fund a problematic organisation,” the MP later told media.

In other business on the day, the parliamentary committee began scrutinising the 2024 budget of the RES & Energy Conservation Fund. The balance sheet provides revenues of €19.4 million from the fixed consumption fee.