The European Commission has reportedly not changed its mind in demanding a refund of €68.6 million in grants given to Cyprus for the liquefied natural gas (LNG) facility at Vasiliko, reports said on Monday.

The amount disbursed to Cyprus to date is part of the total €101 million in grants pledged by the EU for the LNG project due to its eligibility as a European Project of Common Interest.

According to Phileleftheros, the European Climate Infrastructure and Environment Executive Agency (Cinea) recently responded to the Cypriot government’s request. Earlier, the government had asked Cinea to reconsider its decision to ask for a refund of the €68.6 million.

But in its response, Cinea appeared unconvinced by the government’s arguments. After this latest development, said Phileleftheros, the government will make another attempt to get the EU agency not to insist on the refund.

In July, Cinea informed Cypriot authorities of its demand that the €68.6 million be returned to it. The move came after the agency, as well as the European Court of Auditors, were able to confirm information pointing to irregularities in the awarding of the LNG tender to the Chinese-led CPP consortium.

The European Commission at the time sent a letter to the government here alleging two substantive violations. The first concerned the criteria for awarding the contract to the consortium in question (December 2019) and the second concerned the signing in June 2022 of an agreement granting the consortium an extra €25 million.

Regarding the first violation, it emerged that during the selection process by Cypriot authorities, the CPP consortium had received a score below the minimum required. As a result, the consortium should have been disqualified from bidding. Instead, it landed the contract to build the LNG facility.

The second violation relates to CPP’s demand for an additional €25 million, ostensibly to cover increased costs of raw materials caused by the Covid pandemic.

The LNG project came unstuck after the Chinese-led consortium unilaterally terminated the contract in July. The two parties – the consortium and the Cypriot government – are now involved in arbitration proceedings before a London-based tribunal. Separately, the government has been trying to secure the release from Shanghai of the floating, storage and regasification unit – a key asset and component of the LNG project.