Filenews 12 July 2024 - by Chrysanthos Manoli
Yesterday's developments around IPTO's power cable accelerate one decision and slow down another, regarding the continuation of the project.
The possibility that CERA's decisions to recover expenses from ADMIE on the basis of new data submitted and the Government's for investment participation in the project will no longer coincide, so CERA next week or the week after will decide whether to stick to its original decision or amend it, while the Government will wait for a few months for the evaluation of the cost-benefit study to decide whether to participate on the Great Sea Interconnector.
Increase in pressure
Phileleftheros is informed that ADMIE, probably in cooperation with the Greek energy regulator, is now showing a greater loss of revenue from CERA's decision, increasing the pressure on the members of the Authority.
While in the previous days unofficial information was published that the loss for ADMIE - at the stage of construction works, until 2029 - would be about €25 million annually due to CERA's refusal to accept commencement of cost recovery from 1/1/2025, ADMIE now claims a greater loss of revenue, as it reportedly informed that if CERA insists, then the recovery of expenses through electricity bills will not begin even from consumers in Greece.
In this way, ADMIE considers that it reinforces its position that CERA's decision renders the project unviable, bypassing the main financing problem of the project, which is none other than its own inability to secure so far the slightest loan or any funds from investors. Moreover, it is doubtful whether he is willing to allocate equity to pay his instalments (tens of millions each) to Nexans for the construction of the cable.
The meeting that CERA will have on Monday with a delegation of IPTO to discuss the request for revision of the July 2nd decision is of great interest. Given yesterday's information by Energy Minister George Papanastasiou that the decision on the state's participation in the share capital of the Great Sea Interconnector will be taken after the evaluation of the cost-benefit study, which will take 2-3 months, it is obvious that uncertainty around the project is increasing. And this is very likely to further limit CERA's chances of reviewing the decision, given that this uncertainty concerns, at least for the time being, a purely private project.
The deadline of 14 August
There was no public comment yesterday from ADMIE on Papanastasiou's statement that the evaluation of the cost-benefit study will take two to three months. The possibility that more time will be needed is significant, as a procedure will be needed to evaluate the bids expected to be submitted by three pre-selected consultancies, while it should not be completely excluded that a tender will have to be launched for the award of the evaluation study. The use of the University of Cyprus or the Cyprus Institute for evaluation does not seem to be on the table now.
The milestone that ADMIE considers extremely critical for the project is the end of August, when it must decide whether or not to grant the Full Notice to Proceed to Nexans, as its final commitment to fulfil its €1.4 billion contract. for the cable. ADMIE claims to have CERA's final decisions on the regulatory framework by August 14, but it is not known whether this timetable had included the decision of the RoC to participate in the investment scheme.
The €25m annually it is probably almost double
Although it has been said and written by the media for days that ADMIE's calculations limit its recoverable costs for the electricity interconnection to €25 million. Other unofficial information indicates that the recoverable amount on average is estimated at €40-45 million annually, up to and including 2029. The final recoverable amount will be determined according to the costs incurred by IPTO for the interconnection and will be deemed reasonable by CERA.
Similarly, it is disputed by some sources the fee of 0.6 cents per kilowatt hour that is reported to burden electricity during the construction of the project, if CERA finally agrees to start charging citizens from 1/1/2025. Other information states that 0.6 cents is the average of the charge
calculated by IPTO. In periods of high costs, the fee will be significantly higher and will probably be more than three times higher in the operational phase of the interconnection, after 2030, if of course the projects go ahead.
