Our View: Finally something positive to say about LNG plant

The mending of relations between the government and the CPP-Metron Consortium Ltd (CMC), which has the contract for the construction and operation of the Vasiliko LNG terminal, is a positive development as it looked like the two sides were headed for an acrimonious and costly parting of ways.

Until a few days before a way forward was agreed last Friday, Energy Minister George Papanastasiou had raised the possibility of terminating the deal with CMC and finding another contractor to complete the job. This was because CMC had stopped all work at Vasiliko at the end of January and filed a claim for €200 million against Cyprus at the London court of arbitration, claiming the incurring of higher costs and the alleged failure of the project manager, Etyfa (the natural gas infrastructure company), to carry out its contractual obligations.

A meeting of the CMC representatives with Papanastasiou on Friday appeared to have ironed out the differences, while the following day, as if to confirm the project was back on track, President Nikos Christodoulides visited Vasiliko to inspect the work that had been done so far. Meanwhile, in a statement issued after meeting Papanastasiou, CMC said it was “grateful and thankful” that the minister had agreed to meet, “given that all requests for meetings with Etyfa had either been ignored or rebuffed.”

The role played by project manager Etyfa in this sorry affair is very strange indeed. Was it following orders from the ministry in ignoring CMC’s requests for meetings or was this its own decision? Whatever the case, it had a large share of the responsibility for the breakdown in relations with the contractor, which has accused it of big delays in responding to questions about the project and giving unclear instructions. It was said that Etyfa did not have adequate qualified personnel to oversee the project.

It has now been sidelined, with the energy ministry agreeing to deal directly with the consortium, an arrangement that appears to suit both sides. Neither Etyfa nor its parent company Defa (the natural gas public company) attended last Friday’s meeting which decided that the energy ministry will set up a body to monitor the project as well as a group responsible for resolving disputes before they escalate. In short, the energy ministry will take over the project management, in a clear vote of no confidence in Etyfa, which completely failed in its responsibilities.

It is unclear how the financial disputes will be resolved, Papanastasiou saying that this will be left to Defa and Etyfa, which had signed the contracts with CMC. The project, however, will proceed, with the consortium undertaking to bring in 120 workers from China with expertise for the job. These are all positive developments, which led to Papanastasiou’s forecast on Tuesday that the terminal could be completed by the end of the year.