Filenews 11 December 2024 - by Chrysanthos Manoli
While ADMIE is pushing in every direction to reverse the joint decision taken by the energy regulators of Cyprus and Greece to reject a small part of the millions of euros requested by the Greek organization for the electricity interconnection (and approved a recovery of 570 million, for the time being), Fileleftheros reports that the hottest issue, which threatens to blow up the project, or at least Cyprus' participation in it, concerns the "concession agreement" between ADMIE and its subsidiary, Great Sea Interconnector.
That is, the agreement through which the Great Sea Interconnector will become the operator of the interconnection.
Given that the Republic of Cyprus has committed to the Hellenic Republic, through the "framework agreement" of last September, to participate in the capital of the Great Sea Interconnector (GSI), provided that the studies in progress on behalf of the Government give preference to this, the content of the IPTO-GSI concession agreement directly concerns Cyprus as well.
The text of the agreement submitted by IPTO is pending before CERA and RAEE Greece, in order to approve and officially proceed with the assumption of responsibility for the implementation of the interconnection project by GSI. At frequent intervals, reports come to light in Greece pointing fingers at CERA for delaying the approval of this agreement, even though RAAEY has not officially accepted it either.
As it stands, it is "no"
However, we are informed that state bodies in Cyprus are upset and particularly concerned by the content of the agreement under approval and have sent the message in various directions that the Republic of Cyprus will not participate in the share capital of the Great Sea Interconnector, if the draft agreement between ADMIE and GSI is not substantially changed. Both in terms of the letter, but mainly in terms of the business philosophy that is diffused in it.
There is no official update on the matter at the moment.
Phileleftheros reports that this draft agreement submitted by ADMIE regarding the role it and GSI will have for the financing and construction of the electricity interconnection has been thoroughly evaluated by an external consultant of the state. Who is informed that he warned the government side that a possible participation of the state in the share capital of the new implementing body (GSI), As set up by IPTO, it will amount to huge financial risks and serious adventures, which may gradually shake the current very good fiscal situation of the country.
Responsibility is one thing, property is another
We are not aware of all the arguments of the external consultant and the state officials who elaborated the concession agreement seeking IPTO to be approved. Sources familiar with the content of the draft agreement claim that in essence ADMIE assigns to GSI (and the investors who will enter it, under certain conditions and the Republic of Cyprus, possibly IPTO itself) the responsibility of financing the project (€1.2 billion remain, not counting possible revaluations) and its construction. but does not assign ownership of the electrical interconnection.
The same sources told Fileleftheros that ADMIE is trying to create a relationship between project owner (itself) and contractor or subcontractor (GSI and its shareholders). In other words, we have been told, the responsibility for financing and construction should lie with the shareholders of the Great Sea Interconnector, along with the responsibility for implementing the €1.4 billion contract. with Nexans, and then the shareholders to deliver the completed project to IPTO.
This, they suggest, could drag the Republic of Cyprus, if it decides to invest in the GSI, into an economic adventure and risk exposure to debts or guarantees of hundreds of millions. All the more so because for the time being no other entity or company or investment fund has decided to participate in the share capital of GSI and the prospects of doing so soon are not many. Hence it was recently reported in Greek media that the US sovereign wealth fund, with which ADMIE said it was close to an agreement to participate in the implementing entity's partnership, has signalled that it would be interested in granting loans to GSI amounting to €400 million.
Partnership with parity
Although none of the above has been confirmed by the government, Fileleftheros is informed that what would keep the way open for the Republic to participate in the GSI would be a completely different concession agreement from ADMIE to GSI, which would ensure a healthy cooperative of companies-organizations, even state bodies, on the basis of parity and with the necessary condition to maintain -as a cooperative- its full ownership electricity interconnection, in all phases of the project and the revenues from it after the start of its operation. And, of course, equal sharing of shareholder responsibilities for the financing of the project and the challenges it is likely to face.
