The European Commission has requested that Cyprus return the nearly €69mn ($75mn) of EU funds it has received so far for the Vasilikos LNG project, citing "possible irregularities" in the project's tendering process.
The Cypriot energy ministry has received a letter from the commission alleging two substantive violations of EU law, the ministry said on 27 July. The first regards the criteria used in awarding the tender for construction to the consortium of companies it was given to in December 2019, and the second regards "the signing of the bilateral agreement when the additional €25mn was approved" in June 2022, the ministry said.
As a result of these alleged violations, the commission has requested that Cyprus refund the €68.6mn of EU funds it has received so far. The project was partially financed by the EU as a project of common interest, receiving a grant of €101mn.
The ministry will respond within 30 days, and the government's "priority remains the defence of the interests of the Republic of Cyprus, and to this end it is assisting in every way the ongoing investigation", it said. The government will help to "fully investigate the events and demonstrate zero tolerance to possible illegal actions". However, the government also remains "focused on the effort to complete the important energy project in Vasilikos as soon as possible", it noted.
The commission told Argus last week that it was monitoring progress on the terminal, including what implications the withdrawal of the main contractor would have on EU financial support. The project's main contractor — Chinese consortium CPP-Metron — terminated its contract with Cyprus' state-owned ETYFA earlier this month, which halted construction at the terminal.
Police launch investigation
The Cypriot police and the European Public Prosecutor's Office (EPPO) have launched investigations into the project.
The police investigation will seek to identify any potential "criminal offences", and will be conducted by the economic crime prosecution sub-directorate, the police said.
And EPPO said on 25 July that it had opened an investigation into the project "on suspicion of procurement fraud, misappropriation of EU funds and corruption". This decision follows reports it received from the European Court of Auditors and the European Climate, Infrastructure and Environment Executive Agency (CINEA), as well as a highly-publicised report in January from the Audit Office of the Republic of Cyprus, EPPO said.
Neither the police nor EPPO gave further details of the investigation.
