Filenews 8 April 2023 - by Chrysanthos Manoli
Good news and bad news came out of yesterday's meeting of Energy Minister George Papanastasiou with a delegation of the Chinese CPP, which is the protagonist - manager of the consortium that undertook to build the liquefied natural gas (LNG) renewing terminal in Vasilikos.
The good news concerns the conversion of the floating LNG carrier (bought by the state-owned ETYFA under the name Galea and renamed Prometheus) into a floating LNG storage and regasification unit (FSRU). According to the information given by the representatives of the Chinese company, the works for the FSRU, which are being carried out at a Cosco shipyard in Shanghai, have almost been completed and the ship, after the last test tests it will undergo, will be ready to be delivered to ETYFA in June or July '23. Since the jetty in Vasilikos is not ready and will not be even in the summer, it is most likely that Prometheus will anchor in some European infrastructure, until it is possible to exploit it in Vasilikos.
The mere inability to coincide with the completion of the FSRU and the construction of the pier, as well as the other infrastructure that will connect the terminal with the coast and the power plants (EAC and private individuals), constitutes a serious failure of CPP and ETYFA. Under other circumstances, this failure would have cost the Republic of Cyprus millions, as it would have caused a delay in the utilization of natural gas, a fuel cleaner than fuel oil (its use may reduce by 25-30% the cost of purchasing pollutants) but also cheaper, until 2-3 years ago. With today's data and with the price of LNG per mBTU having multiplied after the invasion of Ukraine and the energy crisis, ETYFA's inability to utilize the FSRU and the terminal more broadly... It probably saves money for the Cypriot economy, as with such prices (plus the final cost of the investment, which will be transferred to electricity and consumers) there is no room for cheaper electricity production...
The cuckoo nightingale
The bad news from yesterday's meeting between the energy minister and CPP concerns, firstly, the inability of contractors to determine exactly when the pier and other infrastructure will be ready for regasification and transport of the fuel and, secondly, the confirmation of information that has been available for months that the Chinese company says that for various reasons it has fallen too far out of its budget.
Shortly before the presidential elections in February, it was leaked by the previous government that the pier at Vasilikos would be delivered in October 2023, after a few schedule adjustments. However, it appears that it will not be ready even in October and it is unknown what the new delivery schedule will be. It is most likely that the delivery will be postponed until 2024.
Regarding the higher cost claimed by CPP for the construction of the pier, our information indicates that this amounts to several tens of millions of euros and it is most likely that the final financial settlement of the two sides will be made through arbitration. For the significantly increased cost of jetty, the consortium cites skyrocketing prices of construction materials, but also failure in infrastructure specifications.
BACKGROUND
The... bargaining Anastasiades
We remind you that during the previous administration, President Anastasiades had consented to the payment to the consortium of an additional amount of €25 million. out of a total of €100 million. which it had requested because, due to the pandemic, it claimed that all its purchases of materials and equipment were made at higher prices. It follows from the latest information that the final - increased - claims of CPP and its subcontractors may reach or exceed €100 million that they had requested from the beginning as additional compensation, beyond that provided for in the contract.
On the other hand, due to the long delay in the delivery of the project (based on the contract signed by both sides), ETYFA reserves the right to claim compensation. In this respect too, however, the contractor argues that a significant part of the delays is due to the restrictions imposed worldwide due to the epidemiological crisis.
The project, through the contract, was estimated at around €290 million. €100 million, of which is sponsored by the EU.
