Regardless of whether the Republic of Cyprus participates in the investment for the Cyprus-Greece electricity interconnection via the Great Sea Interconnector submarine cable, Cypriot consumers will bear 63% of the project’s implementation cost, according to an informative note from the Cyprus Energy Regulatory Authority (CERA) to the House of Representatives.
This clarification was provided in response to questions submitted by members of the Parliamentary Energy Committee during a discussion on the topic last month.
Today, the Energy Committee will continue its deliberations on both the electricity interconnection and the Vasiliko Natural Gas Terminal, with the presence of the Minister of Energy, CERA, and other relevant entities.
MPs sought clarification from CERA on whether the Republic of Cyprus would contribute to the investment’s depreciation even if it does not participate in the project. As the Regulatory Authority points out, the decisions of the Greek and Cypriot regulatory authorities on cross-border cost allocation, made based on the European Regulation on guidelines for trans-European energy infrastructure, are valid regardless of the Republic’s involvement in the project.
CERA emphasises that “the commitment to cost allocation stands, and Cypriot consumers will bear 63% of the project’s implementation cost, while Greek consumers will bear 37%.”
Additionally, CERA clarifies that an additional €100 million will need to be recovered from consumers, over and above the €1.2 million that does not concern grants. According to CERA, securing a grant of €750 million was made a necessary condition in the decision on cross-border cost allocation.
Currently, the project’s implementing entity, Greece’s IPTO (Independent Power Transmission Operator), has secured a grant of €657 million from the ‘Connecting Europe’ fund, leaving €100 million still needed to fulfil this condition.
CERA further points out that if the €100 million grant (initially intended to be provided by Cyprus) is not secured, there are two possible scenarios: either the decision on cross-border cost allocation of the two regulatory authorities will need to be amended to recognise the €100 million as part of the project’s capital expenditure, which will be allocated 63% to Cypriot consumers and 37% to Greek consumers, or legal proceedings will have to be initiated by the regulatory authorities against the implementing entity for non-fulfilment of the terms of the cross-border cost allocation decision, impacting the successful implementation of the project.
The project is expected to become operational by the late 2029 – early 2030 timeframe, while the implementing entity has requested that January 1, 2024, be recognised as the project’s construction start date, as that was when construction of the cable by Nexans began in Norway.
CERA’s jurisdiction, not the Parliament’s
In the recently submitted cost-benefit analysis of the project to the Ministry of Energy by IPTO, calculations for the benefit to Cypriot and Greek consumers were included and considered in the decision on cross-border cost allocation.
CERA also informed the House that there is no provision in the legislation for parliamentary approval of the potential consumer charge; such approval falls solely under the purview of the national regulatory authorities.
Regarding the electricity interconnection project between Israel and Cyprus, the implementing entity has not submitted an investment request to the regulatory authorities.
