The Electricity Authority of Cyprus (EAC) has moved to encash a bank guarantee worth around €1 million from Vitol, one of its major fuel suppliers after a fuel shipment was found not to comply with the agreed specifications.

According to reports, the EAC will be receiving the cash from Vitol sometime over the next few days.

The fuel shipment in question dates back one-and-a-half years. Chemical analysis of the shipment revealed that the heavy fuel oil (mazut) supplied by Vitol contained asphaltene well in excess of the specifications.

This constituted a breach of contract by Vitol, as a result of which the EAC was entitled to cash a €1 million bank guarantee supplied by Vitol as surety for the proper performance of the contract.

The two sides had reportedly been in talks to resolve the dispute by other means, but as the negotiations dragged on, in the meantime the fuel was reportedly consumed for electricity generation.

The EAC recently decided to exercise its right under the contract and encash the bank guarantee.
In November 2013 Vitol won for the first time a tender to supply the EAC with fuel. The contract was worth about €500 million, reports said.

Vitol has since been one of the EAC’s staple suppliers.