Guarded optimism for Cyprus cable link

Athens is cautiously confident about reaching a final agreement on the Crete-Cyprus electricity interconnection following the Cypriot government’s commitment to invest €125 million over the next five years in the project.

Athens’ optimism is tempered by the fact that in his statements on the decision by the cabinet, Cyprus Energy Minister George Papanastasiou made specific reference to only one of the four critical issues under negotiation to break the deadlock.

Against this backdrop, the meeting on Thursday in Athens between Cyprus President Nikos Christodoulides and Prime Minister Kyriakos Mitsotakis is seen as crucial.

Papanastasiou said that the cabinet approved the proposal he submitted for the Crete-Cyprus electricity interconnection, which contains an update to the existing regulatory framework that will be integrated into future decisions by the Cyprus Energy Regulatory Authority (PAEK).

The decision, he said, approved the allocation of €25 million per year for a period of five years as a subsidy for the corresponding increase that may arise in electricity bills for the right to recover costs during the interconnection construction period, which runs from 1/1/2025 to 31/12/2029, so that consumers are not burdened by this increase.

The funds will be disbursed from the republic’s fixed fund – the emission rights auction system. The initial installment of 25 million euros will be included in a supplementary budget. If the interconnection is not completed in 2029, the financing of the project will be interrupted and will be restarted – with a charge to consumers – after the project is operational. If the expenditure of Greece’s Independent Power Transmission Operator (ADMIE) in 2025-29 period is more than €125 million, the remainder will be paid by consumers during the operation of the cable.

The cabinet’s decision, Papanastasiou said, was the “culmination of many consultations with all parties involved and the clarifications that have been given, so that the Republic of Cyprus has before it real data regarding the financial, technical and legal aspects of the project.”

“It will contribute to the removal of Cyprus’ energy isolation, since it will interconnect the national electricity transmission system with the corresponding trans-European systems, and will increase the energy security of our country,” he said, adding that “the importance of the project both for Cyprus and for the European Union is confirmed by the fact that the European Commission has approved funding from the Connecting Europe Facility (CEF) mechanism with the highest historical amount of 657 million euros.”

As is evident from the contacts that Christodoulides made with the UAE in the past few days, the Cypriots have brought back to the table the possibility of participation in the project of the national energy company of Abu Dhabi, TAQA, with which Cyprus and ADMIE had signed a memorandum of understanding last December.