Athens warns Nicosia to reverse delays in power grid project

The ambitious electricity interconnection project linking Cyprus with the European power grids through Greece faces significant hurdles as tensions rise between Athens and Nicosia. Recent actions by the Cyprus Energy Regulatory Authority (CERA) have sparked warnings from Greek officials, casting doubt on the project's future.

The Greek Minister of Environment and Energy expressed frustration over delays attributed to Nicosia. The situation escalated when Manoussos Manousakis, President and CEO of the Greek operator implementing the electrical cable, issued an ultimatum following a high-level meeting with Greek Prime Minister Kyriakos Mitsotakis and other key officials. The meeting, held at the Maximos Mansion, included Theo Skylakakis, Minister of Environment and Energy, and Alexandra Sdoukou, Deputy Minister of Environment and Energy.

The announcement from the Independent Power Transmission Operator (IPTO) has provoked a strong reaction in Cyprus. IPTO, controlled by the Greek state, criticized CERA’s recent decision regarding the revenue methodology for the Great Sea Interconnector (GSI). CERA decided that cost recovery for the electrical cable would begin in 2030, upon the start of its commercial operation, rather than in 2025. IPTO warned that if this decision isn't reversed, the project might be halted, which would negatively impact Cypriot consumers by missing an opportunity to reduce high energy costs.

IPTO’s announcement highlighted concerns over investment security and legal certainty, citing a negative financial impact exceeding €100 million due to the decision. IPTO plans to request a review from CERA in the coming days.

CERA’s decision effectively canceled an electricity tariff charge of €25 per year, starting from 2025, pushing it to 2030. This delay creates a financial gap estimated at €128 per year for the project promoter. According to IPTO, Cypriot consumers would pay an additional 0.6 euro cents per kWh during the construction of the Crete-Cyprus interconnection, similar to the burden on Greek consumers.

In Athens, there are concerns about the impact on the construction contract with Nexans for the cable. Greek officials believe CERA’s decision will complicate the repayment of this contract.

Should the regulatory bodies fail to resolve the issue, political intervention from the leadership of both countries appears inevitable. Sources from the Cypriot government indicated that CERA's decision aligns with the current electricity tariff situation in Cyprus and that the government is not willing to increase consumer burdens. The Cypriot Energy Minister declined to comment extensively, stating that while CERA's decision benefits consumers, it is problematic for IPTO and the European Commission, which is funding the project with €657 million. The Commission is likely to increase pressure to expedite the project’s progress.

[Summary of Apostolis Tomaras' original story in Greek published in Kathimerini's Cyprus edition]