CERA’s (Cyprus Energy Regulatory Authority) Chairman was asked yesterday by MPs during the Energy Committee meeting whether the regulatory authority is under pressure to change the decision it made on July 2, displeasing the European Commission’s Directorate-General for Energy and IPTO (Independent Power Transmission Operator).
Andreas Poullikkas replied that yes, CERA is under pressure from all sides. And during the meeting, some MPs confirmed Poullikkas, also exerting pressure on CERA, with some pushing for the maintenance of the far-reaching decision and others pushing for its revision.
As already reported CERA’s final decision on the objection to IPTO’s proposal will be taken after the evaluation of the new data submitted by IPTO is completed. This evaluation is being carried out both intra-service and with the utilisation of an external consultant.
What has become apparent so far is that IPTO’s most easily acceptable request concerns the ‘hole’ of €100 million that has been created following the Government’s decision not to grant (donate) to the implementing entity the €100 million it will borrow from the Recovery Fund, as decided by the Anastasiades Government.
The intention of the current Government is to invest the €100 million in the company to be established in Cyprus, which will operate as an implementing entity, with the leading participation of IPTO.
However, since the existing regulatory decision provides that the implementing entity must raise approximately €750 million in grants, and so far it has only raised €657 million (from the EU grant), it is most likely that CERA will be asked to amend the decision and limit the necessary grants to €657 million.
Regarding IPTO’s main request to start charging and recovering costs from Cypriot consumers from 1/1/2025 (as it will apply in Greece), so that it can recover its expenses, there is currently no indication that CERA intends to amend its negative response of July 2.
CERA’s decision (which may be a ‘yes’ or a ‘no’ to IPTO’s request for a change) is expected to be taken by August 9.
On August 12, there is a scheduled teleconference between the two regulatory authorities of Cyprus and Greece, IPTO, the two relevant ministries, and the European Commission’s Directorate-General for Energy.
IPTO insists that CERA’s decision creates a loss of €100 million to the investment and makes the project unviable, and therefore, it will not proceed unless this decision is changed.
On its part, Nexans warns that if IPTO does not start recovering costs, it will discontinue the construction of the cable and will give up the time slot to other interested parties.
For the time being, €1.94 billion, but…
During yesterday’s parliamentary session, the Minister of Energy acknowledged that there are two uncertainties regarding the final cost of the interconnection.
The first uncertainty concerns the non-signing of the contract between IPTO and Siemens for the voltage conversion stations in Kofinou and Korakia, Crete, so the cost of this section of the project cannot be accurately determined today.
The second uncertainty concerns the final selection of the submarine corridor through which the cable will pass. The final bathymetric surveys for the selection of the most suitable cable route are ongoing, and they may affect the length of the cable or the cost of trenching works, and thus the final cost of the interconnection.
From CERA’s side, Vice-Chairman Alkis Philippou said that CERA has asked IPTO and Nexans to provide guarantees (undertake commitments) that the project will not exceed the current budget of €1.94 billion, without such guarantees being provided.
Given that the project is expected to be completed in 2030 and is burdened with technical and geopolitical uncertainties, it is obviously impossible to rule out the possibility of an increase in the budget.
Energy Minister Giorgos Papanastasiou told MPs that the decision on the state’s participation or not in the project’s equity capital is expected to be made in about three months. An evaluation of the cost-benefit analysis submitted by IPTO will be carried out by an external consultant.
