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The Regulatory Authority of Cyprus (CERA) has once again postponed its decision on the timing of cost recovery for the Cyprus-Crete electrical cable project, causing frustration among stakeholders. Despite CERA's earlier assurances that a decision would be made by early August, the matter remains unresolved following a conference call last Monday.
The delay has prompted the European Commission, along with the energy ministries of Cyprus and Greece, to explore alternative solutions behind the scenes. CERA's current stance, which rejects starting cost recovery from January 1, 2025, has been met with disappointment. According to sources, CERA remains opposed to altering its decision, even after the European Commission attempted to address its concerns about the project's geopolitical risks.
All parties are now awaiting CERA's final decision, though the timeline remains unclear. The delay has led to increased frustration in Brussels and Athens, with officials from the European Commission, the Greek Ministry of Energy, the Independent Power Transmission Operator (IPTO), and the Cypriot Ministry of Energy seeking to bridge a €100 million funding gap that would result from the delayed cost recovery.
Discussions are reportedly ongoing, with several potential options being considered to cover the shortfall. One possibility under consideration is partial funding by the Republic of Cyprus in exchange for a stake in the project. There is growing pressure on the European Commission to resolve the uncertainty surrounding this significant EU project.
So far, the Cypriot government has kept its distance from the escalating situation, a position that has drawn criticism. While it recognizes the strategic and geopolitical importance of the Cyprus-Crete electrical cable, the government appears wary of the political fallout from increasing electricity tariffs to cover project costs. However, Energy Minister George Papanastasiou indicated that the government would soon need to make definitive decisions on the matter. Speaking at a recent conference, he emphasized the urgency of integrating Cyprus into the European electricity market.
Cyprus remains the only EU member state not connected to the common electricity market, despite significant financial support from the European Commission, which has committed to covering about 30% of the project's total cost.
Given the challenges facing other energy projects in Cyprus, such as the Vasilikos terminal and the Aphrodite gas field, the Cyprus-Crete electrical interconnection is seen as a crucial step toward reducing energy isolation. The project would also help mitigate high electricity costs in Cyprus, where prices currently average 33 cents per kilowatt-hour, compared to the European average of 15 cents. The cable is also expected to facilitate the integration of solar energy, which is currently underutilized due to limitations in the power transmission system.
CERA's refusal to approve the start of cost recovery has sparked criticism from those opposed to Cyprus's electrical interconnection with Europe. These critics argue that the project could burden consumers with higher costs, despite the long-term benefits. Some opponents, who currently benefit from high electricity prices, appear to be working behind the scenes to influence the outcome of the decision-making process.
The debate over the Cyprus-Crete electrical cable underscores the complexities and competing interests at play as Cyprus seeks to align itself more closely with the European energy market.
[Summary of Apostolis Tomaras' original story in Greek published in Kathimerini's Cyprus edition]
