Former auditor-general Odysseas Michaelides poured more fuel on the fire on Monday, claiming that in 2019 then-president Nicos Anastasiades took it upon himself to handle any issues with the LNG project at Vasiliko, which had already run into trouble.

Michaelides was commenting on the recent reveal that the European Commission has asked to be refunded €67.2 million of the grants it pledged to the LNG project. The news brought back into focus the problems plaguing the project and also raised issues about a financing gap.

Speaking to local media, the former auditor-general said the affair can be split up into two periods – the period up until March 1, 2023, when the current administration took office, and the period since.

The responsibility of the Nicos Anastasiades administration (2013 to 2023) was “unbearable”, Michaelides asserted.

“In November 2019 I was present at a meeting chaired by Nicos Anastasiades, with [then finance minister] Harris Georgiades, [then energy minister] Giorgos Lakkotrypis, the legal advisors of Defa, including Giorgos Pamboridis, where they insisted that the contract agreement was legitimate and should be ratified”.

Defa is the state-run natural gas public company. Its subsidiary, Etyfa – the natural gas infrastructure company – was established as a special-purpose vehicle specifically for the LNG import project, of which it became the owner.

At that meeting, continued Michaelides, he and the state treasurer stressed that earlier actions were incompatible with EU law governing public procurements.

He said they told the other attendees that the contract with the Chinese-led consortium CPP should not be signed, because the €101 million in grants pledged by the European Commission would be lost subsequently.

“They told us that we needed to sign [the contract] immediately, otherwise we would miss the window to secure financing from Cimea [European climate, infrastructure, and environment executive agency].”

To which, Michaelides and the state treasurer countered: “Even if you sign, the money will be lost because you are engaging in gross violations of the law.”

At that moment, according to Michaelides, the then-finance minister Georgiades responded: “Even if we do lose the €101 million, I would still support the project.”

And Anastasiades weighed in, saying: “It’s on me.”

At a subsequent meeting, in 2022, attendees discussed the contractor’s demand for an extra €25 million to cover the increased cost of raw materials such as steel.

Present at this meeting were the then-energy minister Natasa Pilides, the chairman of Defa, the attorney-general and the state treasurer.

Again, Michaelides and the state treasurer insisted the €25 million request be denied. The others disagreed.

The €25 million was eventually green-lit.

Michaelides noted that many are now asking attorney-general Giorgos Savvides to intervene in the LNG fiasco.

However, he noted, this is the same attorney-general who had been part of the decision-making process regarding the LNG project.

It’s understood that here Michaelides was alluding to the 2022 meeting discussing the €25 million.

The former auditor-general next noted that the cabinet at the time [2019] had authorised Defa to sign a bilateral agreement with CPP and not with the consortium.

“We told them that what they were doing was completely illegal.”

This is in reference to the fact that Etyfa, in charge of the LNG tender, had disqualified one of the members of the consortium that won the contract, but not the consortium as a whole.

But according to the auditor-general, public procurement laws stipulate that disqualifying any one member of a consortium is grounds to disqualify the entire consortium.

The member of the consortium disqualified was an affiliate of a Greek company which had previously been barred from bidding for public contracts in Cyprus, its officers having been found guilty and sentenced by a court here of bribing public officials and circulating forged documents.

Michaelides next turned his attention to the current administration of Nikos Christodoulides.

“For 15 to 16 months they put up with the Chinese consortium. They handled it badly. Now they can’t even give a timetable for completion of the project.”

On the same subject, Energy Minister George Papanastasiou on Monday revealed three points in the European Commission’s letter to Cypriot authorities demanding the €67.2 million back. The letter is dated September 22.

The European Commission highlights three irregularities in the whole affair. The first is non-compliance with the qualification criteria of the LNG tender. This relates to the successful bidder not being qualified to undertake the project.

Secondly, “Incorrect weighting criteria applied for technical evaluation.” This has to do with the dubious grading of the Chinese-led consortium in the technical evaluation of their tender. In a January 2024 report, the auditor-general pointed out that the consortium had in fact scored below the minimum threshold, but that Etyfa ‘rounded up’ the numbers.

The third irregularity flagged by the European Commission relates to the bilateral agreement between Etyfa and the consortium. It has to do with the fact that, given the aforementioned irregularities, the project was not eligible for EU funding.

Papanastasiou added that, should he deem it necessary, he will make public the European Commission’s letter in its entirety.

The contract with the CPP consortium was awarded in December 2019, but actual work did not get underway until a year later. The LNG terminal should have been finished by July 2022.

There followed four delivery timetables, all missed – September 2022, July 2023, October 2023 and lastly July 2024. In that same month, the Chinese contractor pulled out, citing irreconcilable differences with Etyfa and claiming unpaid invoices.