Cyprus’s energy regulator (CERA) on Tuesday rejected most amendments sought by Greece’s IPTO, the project implementer, to financial regulations for the under-sea electricity cable linking Cyprus and Crete.
The decision is seen as a blow to the project’s timeline and financing. IPTO has not officially responded yet, but the outcome is expected to raise tensions as the deadline for a final commitment to cable manufacturer Nexans looms on August 31.
CERA’s unanimous decision specifically denied IPTO’s requests to:
- Introduce a levy on Cypriot consumers to recover project expenses immediately.
- Alter the methodology for calculating the return on capital (WACC), potentially raising the preferential rate.
- Secure additional financial guarantees from consumers in case of project delays beyond IPTO’s control.
- Reduce the project’s useful life from 35 years to 25 years.
CERA’s decision raises concerns about securing financing for the 1.3 billion euro project, excluding the EU grant. ADMIE previously warned that a negative regulatory outcome could jeopardise its ability to provide Nexans the full notice to proceed for the 1.4 billion euro cable.
A separate sticking point is Cyprus’ potential 100 million euro participation in the project company’s share capital. The government has linked its decision to a cost-benefit analysis due on July 11.
The European Commission, which provided a significant grant for the project, is also expected to react negatively to CERA’s decision. The Commission reportedly lobbied Cyprus to accept IPTO’s proposals and is concerned about potential delays due to financing issues.
It remains unclear if IPTO has secured additional financing beyond the EU grant.
