The Christodoulides government's decision to terminate a series of major public infrastructure contracts is proving costly for Cypriot taxpayers, with the cancellation of the Vassiliko liquefied natural gas import project and the Paphos-Polis road contract together exposing the state to tens of millions of euros in additional expenditure and pending arbitration claims, according to Cyprus Mail.
Vassiliko LNG: A $200 Million Arbitration Risk
The most financially significant cancellation involves the Vassiliko LNG import project, a scheme valued at over €500 million designed to diversify Cyprus's energy supply. The government terminated the project after the Chinese consortium leading the development fell into dispute with Etyfa, the state infrastructure company overseeing the works. The breakdown in relations between the two parties proved irreconcilable, and the contract was scrapped. The Chinese consortium has since initiated arbitration proceedings, seeking approximately $200 million in compensation — a liability that now hangs over the public purse.
Paphos-Polis Road: A Costly Reset
A similar pattern emerged with the Paphos-Polis road project. The government terminated its contract with the Greek construction company originally awarded the works, after the contractor demanded an additional €25 million on top of the original €73 million contract value, along with five extra years to complete the project. By the time the contract was ended, the state had already disbursed €16 million to the original contractor.
When the project was re-tendered, the results undercut the government's rationale for the cancellation. The Public Works department had estimated the cost of the road at €90 million, yet the lowest bid received in the new tender came in at €125 million — a figure €35 million above that estimate. Crucially, had the government accepted the original contractor's demands, the total outlay would have been €98 million — still significantly less than what the new tender has produced. As the Cyprus Mail concluded: "The bid that won the first procedure, plus the additional amount demanded, would have saved the taxpayer €25m."
Government Defends Its Record
President Nikos Christodoulides has been unapologetic about the administration's approach. In defence of the terminations, he stated that "we dared to terminate projects that have problems," adding that "we want to prevent, at the end of the day, the Cypriot people being fleeced." Opposition voices, including figures from Disy led by Averof Neophytou, have questioned whether the cancellations have achieved that stated objective, given the mounting costs now visible in arbitration exposure and higher re-tender bids.
A Pattern With a Price
Taken together, the cancelled contracts raise substantive questions about contract management and due diligence within the Christodoulides administration. While the government frames the terminations as principled interventions against overreaching contractors, the financial outcomes — a nine-figure arbitration claim on the LNG project and a re-tendered road costing far more than the original deal — suggest the fiscal cost of walking away has been routinely underestimated.
