Filenews 16 October 2024 - by Chrysanthos Manoli
The initial cost estimate for the Vasilikos gas regasification terminal envisaged €289 million... and something. After the coronavirus pandemic, the Anastasiades Government agreed – despite strong disagreement from the Audit Office – to pay another €25 million to the CMC consortium, due to increased raw material costs. Initially, the consortium asked for €100 million beyond the initial amount.
The contract signed was poorly executed by the consortium, i.e. by the Chinese state-owned company CPP, as its partners have been missing for years, especially the Greek Metron and are only formally – and misleadingly – referred to as a partnership of companies.
With the addition of €25 million, the total cost of the project rose to €314.5 million. In addition, the contract provides for a cost of €10 million annually for maintenance-operation of the Prometheus FSRU by a Norwegian company, for a period of 10 years, with the right to extend for another 10 years.
Quicksand
Of this amount (€314.5 million), the Republic of Cyprus paid through DEFA-ETYFA approximately €239 million. A further €75.5 million will therefore have to be paid out approximately. But no one is positive that the financial backlog for the state is "only" €75.5 million. The determination of the final amount to be paid by the Cypriot taxpayer will be preceded by very difficult negotiations between the state and the Chinese company, which is still holding hostage the FSRU Prometheus in Shanghai, but also the decisions of the Court of Arbitration in London, before which CPP's claim for approximately €136 million is pending but also for the deletion of the right of the RoC to withhold guarantees totalling €70 million.
Unofficial information indicates that it is completely remote that the state will collect the €70 million of the guarantees. He will be happy if he receives half. Even so, it will be a happy ending if the loss of €30-35 million will be accompanied by an agreement with CPP for the delivery of the Prometheus FSRU to ETYFA. And to do so, the Arbitrator's decision on CPP's other financial claims will be pending. But also for ETYFA's financial demands.
What will the offers get?
But, even if everything goes... On the right hand of the Court of Arbitration, no one can guarantee that "only" €75.5 million will be enough for the completion of the Vasilikos gas terminal. euro.
Even if the proceedings in the London Arbitration are completed without financial penalties for the Republic of Cyprus, the completion of the Vasilikos works is by no means certain to cost €75.5 million, which is simply the difference between the economic value of the contract, as amended by the Anastasiades Government (€314.5 million) and the amount already paid by the state to CPP (€238.5 million).
The continuation and completion of the works at Vasilikos (pier and land infrastructure) will have to be done either with the subcontractors used until January '24 by CPP (at a cost of approximately €62 million for the pier and land infrastructure, plus another approximately €10 million to another company for the final improvements to the Prometheus FSRU), either by a contractor who will be selected following new tenders, which will be prepared by the Project Coordinator, which ETYFA will select through... new offers.
Based on reports of the Consulting Engineer used by ETYFA (Hill International) during the four-year period 2020-2024, if the completion of the works is not assigned as soon as possible to the existing subcontractors -Multimarine and Spanopoulos- (who asked -initial price- €52.5 million for the completion of the pier) and if another contractor – operator is sought, the completion time of the works will be longer and the cost much more onerous for the Republic.
The mathematics of the terminal
According to Owner's Engineer (ETYFA):
- The owner's contractual obligation (ETYFA) for the Prometheus FSRU was €197.2 million, of which €186.4 million was paid to CPP. But, according to Hill International, another €10 million or so is needed. for projects to be done in Cyprus so that the ship is capable of working on natural gas regasification. Money likely to be given or donated to CPP to deliver the vessel to ETYFA is not included.
- For the Vasilikos pier, the contract provides for €79.3 million. €35 million was paid to CPP. The consortium of subcontractors used by CPP is asking for approximately €50 million to complete the project within one year. ETYFA, however, has decided to hire a Project Manager, who will coordinate the call for tenders to hire another contractor, with the risk, according to Hill International, of delays in the delivery of the pier and increased costs.
- For the onshore infrastructure of the terminal, the initial contract provided for €31.7 million. We paid the €12 million.
- €6.2 million was earmarked for other projects at the terminal. and we paid €5 million.
