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The Cyprus Energy Regulatory Authority (CERA) has approved an annual investment recovery of €25 million for the Cyprus-Crete electricity interconnection project, also known as the Great Sea Interconnector (GSI), covering the period from January 1, 2025, to December 31, 2029. The total recovery for the five-year period will amount to €125 million. CERA also set a regulatory period of 17 years, beginning January 1, 2025, for a weighted average cost of capital (WACC) premium of 3.7% on the capital invested in the project.
In addition, CERA rejected a request from IPTO (the project promoter) to overturn a previous decision issued in July 2024. The earlier decision had established a four-year regulatory audit cycle for the commercial operations of the interconnector and maintained that there was no need to amend the methodology for adjusting permitted revenues and prices related to the project.
CERA's decision, which was posted on its website, approves the recovery of actual investment costs for the construction period, but stipulates that no additional costs will be passed on to electricity consumers unless the necessary funds are not allocated by the government. If Cyprus' fixed Fund does not provide the allocated amount for a given year, consumers will not bear any additional costs.
CERA emphasized that the financial assurances provided by IPTO and Nexans Norway, the contractor responsible for laying the cable, project the overall cost at €1.939 billion. A potential increase of up to 5% is allowed, pending the completion of the final dredging study.
While CERA has requested full transparency in reporting the project's costs, it acknowledged the need for further contracts to be finalized, particularly those related to substation construction.
