Apostolos Tomaras
As the Cyprus–Crete electricity interconnector awaits a return to activity, the temporary suspension of survey work in 2014 helped ease tensions between Greece’s Independent Power Transmission Operator, ADMIE, and the Cypriot regulatory authorities, mainly over financial matters.
Uncertainty over the project’s future toned down the public exchanges, which had at times spilled into politics and cast a shadow over relations between Athens and Nicosia.
The Cyprus–Greece framework agreement addresses the financial, regulatory, and geopolitical issues surrounding the electricity interconnector.
If and when survey work resumes and proceeds without interruption, Cyprus will once again face demands from ADMIE, the project’s implementing body. Those demands extend beyond the annual €25 million payments over five years that represent Cyprus’ contribution toward recovering the project’s costs.
Judging by public statements from government officials in Nicosia, Cyprus appears willing, for now, to release only the first payment. There have been no public statements addressing ADMIE’s remaining demands, leaving uncertainty hanging over the project in Athens.
The government’s statements also suggest that Energy Minister Michalis Damianou is handling the issue publicly, rather than Finance Minister Makis Keravnos, whose earlier remarks came close to triggering a confrontation between Nicosia and Athens.
It remains unclear whether the Finance Ministry still holds the view that Cyprus will release no funding for the electricity cable until the updated project study is available.
Cyprus and the cable
The difficulty in meeting ADMIE’s demands, particularly on the Cypriot side, has repeatedly been linked to questions about the government’s commitment to the interconnector.
Outside Cyprus, the impression was that Nicosia was having second thoughts and, through its stance, was laying the groundwork for distancing itself from the energy project.
Behind the scenes, government leaks even suggested that Greece was also unenthusiastic about the cable. That claim lost traction when French investment group Meridiam acquired a majority stake in the Great Sea Interconnector, bringing the completion of seabed surveys between Kasos and Cyprus back into focus.
The Republic of Cyprus was absent from the signing of the agreement transferring a 66% stake to Meridiam. Against that backdrop, and following Kathimerini’s reporting on Nicosia’s position, the president’s assurance that Cyprus would honor its commitment to make the first €25 million payment helped quiet the public debate and criticism from opposition parties.
The 2024 framework agreement
In its periodic objections to the financial demands of the Athens-based project developer, the Cypriot side has deftly sidestepped the provisions of the framework agreement signed in Nicosia in September 2024 by the then-energy ministers of Cyprus and Greece, George Papanastasiou and Theodoros Skylakakis.
The interstate agreement, approved by the Cabinet in Nicosia, addressed the project’s financial, regulatory and geopolitical issues.
Yet the first signs of trouble appeared before the ink on the ministers’ signatures had dried. Finance Minister Makis Keravnos’ public comments to Kathimerini revealed that Cyprus’ objections ran deeper than the cold arithmetic of the project.
In Athens, politicians and technical officials pointed to the framework agreement, which included the following provisions:
Cost sharing and recovery of expenditure
The 2024 agreement sets out the financial obligations undertaken by Cyprus and Greece to help fund the project between 2025 and 2029.
It provides for the recovery of a portion of investment expenditure, with Cyprus contributing €25 million annually for five years—a total of €125 million.
Cyprus has yet to make the first payment, covering 2025. The president has assured that it will do so once a NAVTEX maritime notice is issued.
By the end of this year, Cyprus will also be due to make its second payment, about which the government has said nothing.
Cyprus’ contribution toward cost recovery will not be charged to consumers. As previously announced, it will be covered by revenue from the emissions allowance fund.
Cross-border cost allocation
The second major issue addressed by the agreement concerns what happens if the project collapses because of external factors.
In that event, Cyprus and Greece would each cover 50% of the expenditure incurred, replacing the original arrangement under which Cyprus would have borne 63%.
Recognition of expenditure
Concerned that ADMIE could be left financially exposed under contracts for the project’s implementation, the Greek side pressed for the operator, which is majority-owned by the Greek state, to recover some expenditure before the cable enters commercial operation.
As part of that effort, ADMIE asked the Cyprus Energy Regulatory Authority, CERA, to recognize its right to recover €251 million in expenditure already incurred.
Reports that ADMIE was taking legal action against CERA prompted an unusually forceful response from President Nikos Christodoulides.
“If the head of ADMIE thinks the Cypriot government can be blackmailed through letters or paid advertisements, he clearly does not know who he is dealing with,” he said.
The tone and wording caused a stir in Athens. That afternoon, a meeting was convened at the Greek prime minister’s office, bringing together the prime minister, the leadership of the Environment and Energy Ministry and ADMIE’s management.
The following day, Greece’s energy minister pointedly remarked that “the Hellenic Republic does not engage in blackmail; it communicates only through institutional channels.” At the same time, he sought to lower tensions, saying that “relations between Greece and Cyprus are not disrupted by projects.”
Of the €251 million in question, CERA has recognized only €82 million in expenditure.
“First the €25 million. We’ll see about the rest”
Presenting the budget of the Ministry of Energy, Commerce and Industry, Michalis Damianou reiterated the president’s assurance that Cyprus’ €25 million payment toward the Great Sea Interconnector is tied to the Greek government issuing a NAVTEX before the end of October.
The minister said CERA has so far recognized €82 million in expenditure out of the €302 million requested by ADMIE.
He added that the government would make the €25 million payment through the state budget and that the European Investment Bank’s study of the project was also underway.
