Filenews 19 July 2023
A very important development was recorded yesterday, regarding the crucial issue of the electricity interconnection of Cyprus with the European electricity network, through Crete and Greece in general.
Phileleftheros reports that EuroAsia Interconnector has reached a definitive agreement with the Norwegian company Nexans and a final agreement has been signed between the two sides for the construction and installation, by the Norwegians, of the submarine cables with which the networks of Cyprus and Greece will be connected, in order to transfer one thousand megawatts of electrical power to and from both systems. in the first phase, and two thousand megawatts in the next stage.
Official announcements are expected to be issued later in the day.
The newspaper reports that the agreement signed yesterday, after long negotiations that went through a thousand million waves, totals €1.4 billion and will be implemented within a timeframe of seven years.
Phileleftheros reports that in a letter to the Energy Regulators of Greece and Cyprus in early July, EuroAsia Interconnector informed that the project will be fully implemented at the end of December 2029. In the same letter, the company informed that due to the price increases recorded in raw materials, equipment and services in relation to the implementation of the project, the estimated cost of the interconnection rose to €1.94 billion from €1.6 billion calculated in 2017, with approval by CERA and RAE Greece.
Yesterday's development constitutes a very big and important step towards the implementation of the grandiose plan to lift the energy isolation of Cyprus, the only EU country experiencing this isolation, with huge financial costs annually, due to its entrapment in electricity production from expensive and polluting fossil fuels.
EIB lending
However, signing the final contract with Nexans does not remove all obstacles to the implementation of the project. As mentioned above, the Cypriot company currently estimates the total cost at €1.9 billion of which €657 million is theoretically secured. In particular, the €100 million allocated from the European Union will be gradually released (depending on the satisfaction of specific milestones) by the EU's Uniting Europe facility and the €1 million by the Cypriot state, through the Recovery Plan. The remaining €2.25 billion must be found through lending or other investments. Already, the Hellenic Transmission Operator (IPTO) has signed a Letter of Intent with EuroAsia Interconnector for some of the share capital, which means a similar participation in the financing of the project.
EuroAsia Interconnector has long submitted a request to the (former) government for guarantees amounting to €600 million in order for the company to secure an equivalent loan from the European Investment Bank. These guarantees were not granted, but the request was repeated after the change of government and is currently being reviewed by the Ministers of Finance and Energy. However, other ways of possibly supporting the EuroAsia Interconnector are being examined by the government, with the least possible risk, since the goal of interconnection with the electricity grid of Greece (and later Israel) is officially considered of strategic importance.
Yesterday's signing of the EuroAsia Interconnector and Nexans contracts may help the government decision to support the investment in some way, without excluding the state participation in the share capital and management of EuroAsia Interconnector, due to the importance of the project for the country.
As we have written in previous reports, the EU is strongly pushing for the state to take decisions that ensure the rapid promotion of the project, otherwise warning that the €657 million grant will be given to other projects in the European area.
Intervention
Petrides asks for an explanation
Former Finance Minister Constantinos Petrides intervened on the issue yesterday, through his twitter account, who wrote the following: "The assurance (apparently meant by the private operator EuroAsia Interconnector) was that the financing of the project would come from investors (who had been found) and the European Investment Bank. If it was not approved by the EIB and no investors were found, they need explanations and transparency before the taxpayer pays."
From the information so far, there is no agreement between the private operator and the EIB on lending. From the company's environment, there is talk of the possibility of lending from a fund connected to the Norwegian company Nexans, with which negotiations for the construction and laying of the cable are ongoing, for about €1.4 billion.
