Filenews 23 September 2024 - by Chrysanthos Manoli
In order for CERA to take last Friday's crucial decision, which approved the start of IPTO's recovery of expenses from 1/1/2025, difficult negotiations had to take place between the governments of Cyprus and Greece, but also between the two regulators, the Commission and IPTO.
One of the issues that deeply troubled the Cypriot Government and public opinion and still concerns was the final cost of the interconnection, even if it is completed and operational. Either in 2030 or later.
The project's budget currently stands at €1.94 billion, but everyone is worried that the amount will increase, unknown to what amount. The efforts made by CERA and the government to put a limit on the cost of the cable, so that any amount beyond 1.94 billion euros is not enough. to be covered by the implementing body or at least taken equally by consumers in the two countries (instead of 63-37%) fell on deaf ears, due to disagreement between the body and the Greek Government.
However, CERA recorded in its decision in two points the assurances received from IPTO and Nexans that there will be no significant cost overrun. The recording of assurances shall not constitute a commitment by the promoter to bear any additional costs. However, they may be used at a later time by CERA, in case of disagreement with the implementing body for the recovery of expenses well beyond €1.94 billion.
In particular, the text of CERA's main decision states the following: "The above incentives are also provided in the context of the statements and on the basis of the reports and assurances of the Implementing Body IPTO S.A. and Nexans Norway AS that the total cost of the project, which has been set at €1,939,200 million, will not increase by more than 5% upon completion of the dredging study conducted by Nexans Norway AS, in parallel with the construction of the cable, nor with the completion of the final offer by the contractor for the construction of the converter stations (Siemens)".
Elsewhere in the decision, it is stated that the following were taken into account for the approval of IPTO's requests:
"The assurance of Nexans Norway AS, through its representative Mr. Pascal Radue, Executive Vice President Generation and Transmission, in a conference call held on July 23, 2024, that based on their many years of experience, the cost of the cable is not expected to increase even if the results of the seabed survey alter the route of the cable."
IPTO's assurance
CERA also took into account:
"The assurance of the Implementing Body IPTO S.A. in a teleconference held on July 23, 2024, that based on its many years of experience, the capital cost of the project (cost of cable and cost of converter stations) is not expected to be differentiated,
The written assurance of the Implementing Body IPTO S.A., in a letter dated August 6, 2024, that all unit prices (cables, works including seabed survey, protection, etc.) have been locked with the signing of the contract with Nexans Norway AS, that the basic characteristics of the cable connection have been finalized to such an extent with the contractor company that make the possibility of cost increase of the specific contract extremely small and finally that it estimates that the cost variation of the cable section of the project will not exceed the range of ±5%, as well as its indication that the risk of exceeding the budget for Siemens' converter stations remains small, and confirmation that the amount of Siemens' bid will in no case exceed the amount of its indicative offer'.
