The competent bodies of the European Union have sent the Energy Ministry a debit note for €67 million, demanding the return of the grant paid from EU funds for the construction of the Liquefied Natural Gas (LNG) import infrastructure at Vasiliko.
The Energy Ministry briefed the Legal Service, Finance Ministry, Natural Gas Public Company (DEFA) and Natural Gas Infrastructure Company (ETYFA) and is awaiting further guidance.
The audit process on the controversial project began about 14 months ago when the European Commission and the EU’s financing agency CINEA (European Climate, Infrastructure and Environment Executive Agency) requested information on the tendering and execution procedures for the LNG import terminal project in Cyprus.
Chronicle of a debt foretold
Prior to that, in January 2024, the Audit Office published a report denouncing the lack of sufficient competition, as well as illegalities and irregularities in the tendering process (October 2018), and in the awarding of the contract (August 2019), along with serious delays and claims from the Chinese consortium.
In March 2024, the European Public Prosecutor’s Office (EPPO) opened a criminal investigation into possible offences committed by ETYFA, the Chinese consortium CPP, or other parties involved.
In July 2024, the contract between ETYFA and CPP was definitively terminated. That same month, CINEA notified the Republic of Cyprus that it was launching an investigation and wanted answers. This should have come as no surprise given that from the €500 million construction and operation cost of the project, €101 million came from EU funding under the ‘Connecting Europe Facility’ Project of Common Interest.
Between July 2024 and September 2025, the Energy Ministry and the EU exchanged two rounds of correspondence, with the Republic submitting lengthy explanatory notes in response to CINEA’s audit queries.
Ultimately, CINEA was not convinced by Cyprus’ arguments. Two days ago, it sent Cyprus a debit note demanding the return of €67 million, that is, the amount disbursed so far to Cyprus out of the €101 million grant.
Cheaper energy remains out of reach
The tragicomic element of the whole affair is that, according to the Audit Office report, the involvement in the CPP consortium of individuals previously convicted in Cyprus and Greece for bribery and bid-rigging in public works should have automatically disqualified the consortium from the tender process for the Vasiliko infrastructure project.
Nevertheless, under pressure from the then government, it was decided that there was no alternative option for bringing natural gas to Cyprus. The concern was that if the tender were canceled, the €101 million in EU funding would be lost while the import of natural gas – along with the economic benefits for Cyprus – would be delayed by at least five to six years.
Today, there is no funding, no natural gas has arrived, and instead what remains is an unfinished project of uncertain fate, while Cypriot consumers continue to pay the second most expensive electricity in Europe in terms of purchasing power.