FIlenews 8 July 2023 - by Chrysanthos Manolis
Urgent intervention yesterday by President Christodoulides, who invited the director of the private body EuroAsia Interconnector to the Presidential Palace.
Clear and stern warnings from officials and bodies of the European Union regarding serious delays observed in the promotion of the electricity interconnection project with Crete forced the President of the Republic yesterday to intervene and invite the director of the private entity EuroAsia Interconnector, Nasos Ktorides, to a meeting at the Presidential Palace.
Energy Minister George Papanastasiou and officials were also present at the meeting.
Phileleftheros reports that the pending issues around the long-awaited – and crucial for electricity production in Cyprus and especially for the green transition – interconnection with Crete are serious and call into question the smooth progress of the project.
Indeed, the European Commission has reportedly warned the Cypriot government that if there is no immediate mobilization at political level and if decisions are not taken to ensure that the project can be implemented on time by the private promoter, then the Commission will revoke the decision of the European Connecting Europe Facility (CEF) to generously finance the project with €657 million and will channel the money into more mature projects in Europe.
This would be a tragic development for Cyprus, electricity production and the wider economy, as without electricity interconnection with other networks – let alone the European one – the gigantic effort that needs to be accelerated for the green transition and the reduction of electricity costs could collapse. European officials and technocrats who sounded the alarm bell – not once – point out that important milestones that are EuroAsia Interconnector commitments have not been met.
One of these milestones was announced only on June 29, '23 and concerns the strategic participation agreement of the (private interests) Independent Power Transmission Operator of Greece (IPTO) in the share capital of EuroAsia Interconnector, at a percentage of 25%. ADMIE's participation in the ambitious project of the Cyprus-Greece interconnection (and possibly Israel) was a long-standing requirement of the EU Directorate General for Energy (DG ENERGY), in order to ensure the expansion of the know-how already provided by the Greek organization to the Cypriot company and the acceleration of projects.
However, two other important milestones are pending. One concerns the signing by EuroAsia Interconnector of a final agreement with Norwegian Nexans, for the supply and installation of HVDC 500 KV HVDC impregnated mass (MI) cables for the 1,000 MW Cyprus-Crete link, with the possibility of expansion to 2,000 megawatts. Nexans had been selected since July 2022, however signatures are pending to date, despite assurances that it is only a matter of time before this front is closed.
The finalization – and of course the execution – of the agreement with Siemens for the design, construction, supply, installation and operation of the VSC-HVDC converter stations in Kofinou is also pending.
Direct intervention and involvement of the State
The cost of the project to interconnect the electricity grids of Cyprus and Greece was estimated relatively recently at around EUR 1.5 billion. But reports indicate that it has now jumped to EUR 1.8 billion. And as long as the delay in signing binding agreements with equipment suppliers is prolonged, it will increase.
In addition to the €657 million grant, from the EU, the EuroAsia Interconnector also secured a commitment of EUR 100 million. by the Cypriot state, through the national Recovery Plan. The remaining money, about $1 billion, will have to be raised by the company through borrowing.
Intensive contacts have been going on with the European Investment Bank for some time, but nothing has been announced as a positive outcome.
Faced with the risk that plans for the project will be thwarted if the EU cancels its financing or if the EIB – or other institutions – are not persuaded to finance the EuroAsia Interconnector quickly, the Cypriot Government intends to engage directly and dynamically, at the highest political level, in order to ensure the financing of the project, through multilevel coverage by the state.
It is not known whether this includes any intention by the Government to provide financial guarantees for the amount required or part of it.
What is certain is that it has become clear to the company that this project cannot be cancelled (condemning Cyprus to remain the only isolated -electrically- state in the EU) and that the state will provide urgent support and assistance but will also claim substantial participation.
