Our View: Unsolved Cyprus issue threatens major projects
“The exploitation of the natural gas deposits, the pipelines, the electricity interconnectors, the terminal stations and everything else we are discussing in the meeting, will remain, yet again in the cycle of optimistic scripts that would constantly be postponed for the future as long as the Cyprus problem is not solved.” Former Disy leader Averof Neophytou hit the nail on the head with this comment made regarding the Great Sea Interconnector (GSI) that was the subject of discussion at Wednesday’s meeting of the House energy committee.
The discussion had focused on the “geopolitical risk” of the project with the energy minister saying this risk belonged to the “new agency of implementation.” This agency had asked the energy regulator, Cera, to change the regulatory framework so that it would cover the costs of the project in the event that it is not completed because of exogenous factors. In other words, if Turkey decided to stop the laying of the cables by use of its warships and the project was abandoned, the implementation agency (that is the Greek power transmission operator, Admie, which is undertaking the project) would be able to recoup all its costs.
Admie’s proposal, which Cera has opposed, is for two thirds of the cost of the project to be funded by a levy by the EAC on all its subscribers from January 1, 2025. The remaining third would be covered by a levy on Greece’s electricity users. The payment for the project in advance was necessary so that Admie could secure a revenue stream that would allow it secure funding from banks. Cera does not want EAC subscribers to pay for the project before it is completed, but without the levy it cannot go ahead. And a decision on this is a matter of urgency because Admie needs to put in an order for the manufacturing of the cables as soon as possible, otherwise it would lose its turn.
This is where the geopolitical risk comes in. If in two years, after having paid for the cables, the Turkish navy prevents the work on the interconnector being completed, Admie would expect the Cyprus state to cover all its cost until then. The Cypriot taxpayer would have once again paid for a project that would be abandoned. Neophytou is absolutely right in pointing out that as long as the Cyprus problem remains unsolved and the Republic remains at odds with Turkey no energy plans would be completed. Turkey has the military power to stop any project from taking place and has shown it is prepared to use it.
How could the government back the GSI, when there is such a geopolitical risk on the horizon? Connecting Cyprus with the European electricity market, as Papanastasiou has said on countless occasions, is of vital importance to the island and its economy but can we afford to pick up the bill for another energy project that would not be completed and offer us no benefit?