THE HOUSE Finance Committee has asked in writing the Natural Gas Public Company (DEFA) and the Cyprus Energy Regulatory Authority (CERA) to hand over any and all official documents relating to the process for securing supplies of natural gas.
Deputies want to determine whether plans to purchase 20-year supplies of liquefied natural gas (LNG) and build a re-gasification facility on the island to store and process the fuel are the best option – financially speaking – for Cyprus.
The committee said it needs convincing before it green-lights the €18 million for the semi-governmental Electricity Authority of Cyprus (EAC). The sum is the EAC’s supplementary budget for the year which will be used to fund investments and projects in preparation for the advent of natural gas.
The EAC is a stakeholder in DEFA, the entity that has been given exclusive rights to import and distribute natural gas. Recently the EAC concluded talks with interested strategic investors for building a re-gasification plant near Vasiliko, Limassol.
The EAC has already invested hundreds of millions of euros in anticipation of the switchover to natural gas, slated for 2015. To date it has purchased two combined-cycle turbines (which can burn diesel or natural gas) and plans to acquire three more. But it has done so in compliance with official government policy.
Specifically, deputies on the House Finance Committee want more information on the much-talked about the initial target price set by the EAC for the purchase of natural gas. Opposition politicians have alleged that the offer given by Shell – deemed the best offer by DEFA which conducted the talks – involved a much higher price than the target set by the EAC.
Deputies on the committee therefore want to look at all the studies carried out by experts advising the EAC with regard to the target price for natural gas, as well as the estimated final cost of the re-gasification facility.
“We have asked that this cost be weighed against all the other recommendations made in the past regarding the advent of natural gas…to see whether the EAC’s recommendation is cheaper or costlier than the other options,” said DIKO MP and finance committee chairman Nicholas Papadopoulos.
In its letter to DEFA, the committee also asks DEFA for its opinion on whether the proper procedure would have been to call open tenders and for the government to have asked for a specific price, rather than to hold secret talks with interested suppliers.
The committee further poses the question as to whether Cyprus, due to its small size, could satisfy all its requirements by purchasing natural gas on the spot market and according to need.
“Precisely because our requirements are low, this could be done from time to time, and we could store the natural gas and use it according to our needs,” Papadopoulos told newsmen.
“But in order for that to happen, we would have to alter the plans and the legal framework…which gives the EAC a monopoly. Today, this monopoly has brought us the most expensive electricity in the EU. God forbid if [the EAC] brings us the most expensive natural gas in the world,” he remarked.
For his part, European MP Ricos Erotokritou called on government officials and all relevant authorities dealing with the natural gas issue to attend the House Finance Committee and to submit all the evidence “with transparency and without concealing anything.”
The deputy went on to talk of “corruption and backdoor dealings behind the back of the Cypriot people,” but did not elaborate.
