At the Ministry, the discussion on Cyprus's participation in the EuroAsia Interconnector – The government's alternatives for the terminal Vassilikou
Next week, the discussion on Cyprus's participation in the EuroAsia Interconnector will continue in the Council of Ministers, stated the Minister of Energy Giorgos Papanastasiou, who today presented the advantages and risks for the project to the body.
In statements after the session of the Council of Ministers, Mr. Papanastasiou also mentioned that the Republic of Cyprus is in arbitration in London with the construction company of the land terminal in Vasiliko and the termination of the relationship with the contractor and the claim for compensation due to delays and failure to deliver the project as originally planned.
Asked about this, Mr. Papanastasiou said that the issue of the electrical interconnection with Greece and Israel, which is subsidized by the EU with 657 million euros, was discussed. “We will continue the discussion next week and I hope that the right decision will be made by the Republic of Cyprus”, he added.
When asked if there will be a new meeting between the three countries of Cyprus, Greece, Israel, the Minister of Energy said that there was a discussion last week with the new Minister of Energy of Israel, with whom they discussed the electrical interconnection of Israel with Cyprus, the the connection of Cyprus with Israel's natural gas network and the acceleration of the tripartite relationship of Cyprus, Greece, Israel.
Mr. Papanastasiou said that he received an invitation to go to Israel and the same invitation will be received by the Greek Minister and then they will decide on its implementation. “I believe that the meeting will take place in March and possibly in Cyprus,” he said. In this meeting, he said, more general energy issues will be raised and he noted that Israel sees Cyprus as a friendly country in which it would like to have alternative solutions for its energy needs. He also mentioned that Israel is the country in the eastern Mediterranean with the largest quantities of natural gas at the moment and Cyprus “constitutes an alternative solution for Israel's exit to the markets of either natural gas or electricity”.
For electricity, the Minister mentioned that Israel will have great needs in the next 3-4 years.
When asked if the Republic of Cyprus should have answered whether or not it will participate in the financial leg for the EuroAsia Interconnector, the Energy Minister said that January 31 was the day to respond to the Independent Electricity Transmission Operator of Greece (ADMIE). “However, because further discussion is needed” and the President of the Republic today had obligations following the Cabinet meeting, Mr. Papanastasiou said that they considered it appropriate to continue the discussion next week.
“As the Ministry of Energy, we presented the advantages of this electrical interconnection, as we also presented the risks, risks that the specific project has and through this discussion that started today and will continue next week, we will conclude and the decision will be made next week,” he added.
Asked to say what are the painful solutions for the Vassilikos terminal, to which he referred in the morning in his radio statements, Mr. Papanastasiou said that the terminal “is going through some additional difficulties, beyond the techniques it had”. The contractor, he said, has stopped construction work on the new terminal and reiterated that the floating unit is 95% ready, but it cannot be taken over by the Republic of Cyprus – even if it belongs to it – because it is awaiting certification by a classification society.
As for the land terminal, he continued, it is 45-50% complete, there is still a lot of work to be done, noting that without a terminal the floating unit cannot operate.
They are considering, he added, various alternatives to which they have planned, depending on the reactions of the manufacturing company. “A painful solution, which I cannot hide, is the complete interruption of relations with this particular manufacturing company,” he noted.
Answering a question on the matter, the Minister of Energy said that the company requested too many extensions and recalled that initially the project should have been delivered in September 2022, an extension was requested for July 2023, a new schedule was given for October 2023 and then another schedule for July 2024. “A contractor that is constantly extending the delivery date of a critical infrastructure for a state, let alone a European project, you understand that the problems must be serious,” he said.
For this reason, he continued, the Republic of Cyprus through DEFA will perhaps be called upon to assess the capabilities of the specific contractor within the next few weeks and if necessary will take the painful decision to terminate the relationship.
He also mentioned that the contractor in the past requested additional amounts, saying that the Republic of Cyprus considered that these amounts were not justified, but could justify €25m through a legal process through the KEA, which had been explained and documented due to the increase in the price of steel internationally .
“We are currently in arbitration, which was started about 1 year ago by the contractor, but last Friday some things happened, the first breach of contract.” Stopping construction of the terminal construction work, he said, is a breach of contract. On Saturday, he said, at the London arbitration, they were shown a list of works valued at more than 200 million euros, which the Republic of Cyprus believes there is no documentation of these claims.
“Our side he strongly believes that he has followed the contract to the letter” and may have serious demands from the delay of the works and the delivery of the project on time, said Mr. Papanastasiou. He added that “it will be part of the discussion that will take place either in London or somewhere else.” There are clauses in the contract that allow for notice for delays and the contractor's failure to complete the project, he noted, saying he would not like to divulge numbers.