A “fiscal nuclear bomb” looms over Cyprus due to the risks attached to the LNG import project at Vasiliko as well as the Great Sea Interconnector, an opposition MP said on Thursday.

Akel’s Irini Charalambides made the remarks to the press after a session of the House audit committee.

The committee was convened to discuss the treasury’s fiscal report for the year 2024 – but MPs took advantage of the presence of state treasurer Andreas Antoniades to ask questions about the LNG and the interconnector projects.

Charalambides asked the state treasurer about the fiscal risk of Cyprus having to return €67 million to the European Commission for the stalled LNG project.

In late September it emerged that Brussels demanded that Cyprus refund grants worth €67.2 million in connection with the LNG terminal at Vasiliko.

This has to do to with a number of irregularities flagged by the European Commission relating to the dubious circumstances in which the contract for the LNG project was awarded to a Chinese-led consortium back in December 2019. The project is now in shambles, half-completed after the contractor walked out.

Answering the MP’s question, Antoniades simply said the €67.2 million has to be paid back by November 6.

Regarding the Great Sea Interconnector – a mooted subsea cable linking the electricity grids of Cyprus and Greece – the state treasurer said his agency “insisted” on recognising a fiscal risk for the project for the period 2026 through to 2028.

Cyprus has budgeted €25 million toward the GSI for the year 2026, he added.

Rita Superman, an MP with the Disy party, then asked Antoniades whether the state treasury plays any part in checking public tenders or the criteria used for selecting the winning bidder.

Antoniades said a ‘reform programme’ consisting of ten measures is being pushed forward. One of the measures relates to changing the rules on how public tenders may get cancelled. The government meanwhile is providing training to 40 functionaries on how to handle large-scale public projects.

Coming back later, Charalambides spoke of a “fiscal nuclear bomb” hanging over Cyprus.

“It’s not just the €67 million we must return to the European Union…and we still don’t know the final cost of the LNG project,” she said.

“There’s also the GSI, another project that no one knows the final cost, and beset by immense geopolitical risk.”

The Akel MP recalled how Turkish gunships had forced a halt to depth surveys for the interconnector cable off the Greek island of Kasos.

“Evidently you can all understand that we live at a time when expecting Europe [to intervene]…would be supremely naïve. Turkey is in the ascendant due to the geopolitical situation.”

Charalambides went on: “Let no one be surprised that I’m fully aligned with the finance minister on this matter [meaning the GSI] because, as I said, a fiscal nuclear bomb hangs over us.”

It’s understood that Charalambides was criticising circles who seek to allay concerns over the uncertainty surrounding the GSI by arguing that the project is under the wing of the European Commission.

“There are no guarantees, no depth surveys, huge geopolitical risk, and everyone is saying their piece about it…”

But the MP did note that Cyprus is off the hook for the €657 million in grants pledged by the European Commission for the GSI.

Rather, she said, Greece’s Admie is accountable for those grants.

Admie – Greece’s independent power transmission operator – is the project promoter for the interconnector.