Cyprus Mail 13 June 2019 - article by CM - Our View
A section of the VTTI fuel terminal at Vasiliko
WHAT DO traffic cameras and natural gas have in common? The state has been unsuccessfully trying to introduce them in Cyprus since the Papadopoulos presidency, which ended more than 11 years ago in 2008. The traffic cameras operated for a few months in 2006 but were removed after disagreements with the supplier, and since then there have been several botched tenders’ procedures. The current government has said these would be installed in 2020/21 but it is very difficult to believe any such promise.
Similar ineptitude and indecision, exacerbated by the clash of rival interests, has prevented the importation of natural gas for more than 10 years, even though the EAC had installed gas-powered generators in its power stations. Plans by the Papadopoulos government to set up floating terminals in the sea to receive LNG that would be deliquefied and supplied to power stations were abandoned after accusations of conflict of interest. Since then, one aborted plan has followed another with no government prepared to take the big decision.
Political parties and the EAC unions tried to dictate government policy with the result that a state monopoly for natural gas was set up – the Natural Gas Public Company (Defa) – which has proved as inept as the state in securing a deal. Defa was set up under pressure from parties and unions, presumably to protect the EAC monopoly, but also to guarantee a steady price. If a deal was signed with a private company, it was argued that it would be able to dictate prices.
The situation has now been complicated because a Greek company – Energean – has offered to supply Cyprus with natural gas by pipeline from two Israeli gasfields. It claimed it would be able to supply gas within two years and could be the supplier of two companies that had licences for power production. This, however, would be against the law sanctioning the Defa monopoly. The government’s current plans involve the creation of a LNG terminal in Vassiliko which would regasify the LNG and supply power stations, but the cost would be significantly higher – because of the conversion processes – than bringing the gas via pipeline.
Everything is up in the air because governments have bowed to pressure from unions and parties that want to preserve the EAC monopoly for as long as possible. If this were not a consideration the electricity market would have been opened up to competition years ago, and power stations would be powered by the cleaner and more economical natural gas. The market would have solved all the problems that the state has been incapable of tackling for more than a decade.
Electricity rates are set to go up by 5 per cent from this month while they rose by 11 per cent in the last year, but we are no closer to a decision about the importing of natural gas today than we were five years ago. The consumers always pick up the bill of government ineptitude and state interference in the market.
