MPs hear LNG grant could be lost

Lawmakers on Tuesday sounded the alarm that Cyprus may lose part – or worse – all of an EU grant allotted to the liquefied natural gas (LNG) terminal in Vasiliko.

In parliament, officials from the Natural Gas Public Company (Defa) informed MPs that Cyprus must meet certain requirements to cash in on the full €101 million grant allotted under the Connecting Europe Facility.

Defa’s general manager Marios Menelaou told parliamentarians that the LNG terminal project is currently 80 per cent complete overall – the floating, storage and regasification unit (Fsru) is at 97 per cent, while the land-based infrastructures are at 50 per cent.

Defa’s chief financial officer Nikolas Valanides said the project has already got two extensions from the European Commission, with the latest extension granted set to expire at the end of 2024.

“There will be no more relaxations beyond that,” he said.

Should the new timetable for the LNG project go beyond 2024, then decisions would have to be taken “on a political level”, Menelaou said.

If the project is stuck at 80 per cent by the end of this year, it could mean losing out on 20 per cent of the remaining EU grant.

For the remaining €28.9 million to be disbursed from Brussels, two conditions must be met: first, recognised expenditures for the terminal must have come to €253 million by the end of 2023, and secondly the project must be completed and issued the relevant certification by the end of 2024.

Chair of the House energy committee Kyriacos Hadjiyiannis opined that the project will not get finished by the end of the year.

“And if this extension [from Brussels] is not discussed responsibly, with all our cards on the table, then certainly the European Commission will come and make cutbacks. And I’m not so sure either that the Commission will make just the proportional cut or if the entire grant amount is put in jeopardy.”

According to documentation shown to MPs, to date Defa has invoiced €10 million in payments to the owner’s engineer for the LNG project. The owner’s engineer is the government’s consultant who keeps an eye on the contractor’s performance.