The agreement signed last Wednesday by IPTO and Meridiam, for the acquisition by the French company of 2/3 of the share capital of the company Great Sea Interconnector, has strengthened the belief in Greece and Cyprus that the electrical interconnection between the two countries is possible to proceed and be implemented.
The Cypriot Government welcomed the development as a huge dynamic in a statement by the competent minister and reiterated that the electrical interconnection is a desirable project of strategic importance for Cyprus.
However, everyone's attention now turns to the next steps of the Cypriot Government: First, will the French company pay the money that IPTO claimed until recently and will it then be claimed by the French company on behalf of GSI?
And second, will it participate in the investment by purchasing share capital in GSI and assuming part of the construction costs, so that later it can participate in any profits from the investment?
The information of Fileleftheros states that the position of the Cypriot Government did not change after the acquisition of the majority of GSI by Meridiam: Cyprus will pay what is due to it, based on the framework agreement signed by the two governments, but as soon as the Greek Government issues the navtex to carry out marine surveys to map the seabed through which the cable will pass, so that the final cost of the project can be calculated more reliably.
Regarding the participation or not of Cyprus in the share capital of GSI, no decision will be taken unless the study requested by the two governments and IPTO to be carried out under the responsibility of the European Investment Bank (EIB) is completed. The study will update the costs required for the electrical interconnection and will assess the technical challenges that seem to exist, such as its great depth and significant fluctuations in some areas between Crete and Cyprus.
Navtex, Turkey, French
Regarding the issuance of a navtex for the reservation of maritime space for the purpose of carrying out soundings and other surveys, there is no official position from the Greek government, nor from GSI or IPTO.
Along with the agreement for the concession of 66% of the shares in Meridiam, an agreement was signed last Wednesday between Meridiam, IPTO and Nexans, to proceed quickly with marine research and the completion of the construction of the cable. However, nothing was officially known by those involved.
It was written in the Greek press that maritime exploration will begin in the autumn, but nothing more than journalistic information or estimates.
The Cypriot Government seems to have received information or assurances that the sonarities will start soon, in cooperation with the GSI - with Meridiam as the first violin - and the also French Nexans. It is not clear whether the assumption of responsibility for maritime research by two French private law companies can change the Turkish stance on the ground, i.e. in the sea area southeast of Kasos, which the Turkish Government considers to fall within the country's continental shelf and not the Greek EEZ.
Many point out that since the management of the work of the special ship for the sonarities will be done under the responsibility of Meridiam and Nexans and not by IPTO, a company with the Greek state as the majority shareholder, the chances of their understanding with the Turkish side are increased, without serious political cost for the Greek side.
The Cypriot Government has long since sent a message to the Greek Government that the obligations it undertook to pay IPTO 25 million euros. euros per year, for the five years that the constructions are estimated to last, is directly linked to the issuance of NAVTEX to proceed with the projects. Although the Greek side does not adopt the Cypriot position that the payment of 25 million euros. per year requires the issuance of Navtex, payments did not start from the Ministry of Finance of Cyprus and the pressure from the Greek Government weakened long ago.
The latest information we had from a competent authority states that the condition applies: As soon as the Navtex for the sonarities is issued, Cyprus will start making payments (a total of €125 million until the interconnection is operational), regardless of whether or not the EIB's study findings have been issued by then. That is, the payment of the agreed amounts is not linked either to the final cost of the project as can be calculated by the EIB, nor to any vague points in the study on the usefulness of the project for Cypriot electricity consumers or on the burden of the investment cost on the final price of the kilowatt hour.
The economic differences
However, the differences between the Cypriot side (Government – ERA) and IPTO did not only concern the €125 million. to be paid within five years. IPTO claims the recognition of a multiple amount by CERA, as expenses it has already incurred, without it being entirely clear that, with the exception of €125 million, it still agrees to pay the rest after the operation of the electrical interconnection.
It is not clear whether Meridiam will differentiate its stance towards CERA for the claimed amounts, either during the construction phase of the project or after its completion.
The position of the Government - and CERA - remains that, with the exception of the €125 million agreed between the two governments, no other amount will be paid before the interconnection is operational.
Based on the framework agreement signed two years ago by the then Ministers of Energy of the two states (Papanastasiou and Skylakakis), Cyprus already owes two instalments of €25 million and next January the 3rd instalment will be calculated.
The EIB study
Although Energy Minister Michalis Damianos stated in the past few days that Cyprus will wait for the European Investment Bank's study before making any decision to participate in the project as an investor and estimated that the study will be ready towards the end of 2026, there is no information from the EIB whether the study is in progress or whether we are still in the procedures for its assignment to internal or external consultants.
The GSI side (Meridiam and IPTO) appears to consider the study unnecessary, given that the viability of the project, as a business investment, is confirmed by the decision of a strong investment group to participate in the share capital of GSI.
The government of Cyprus, however, insists on the need to carry out the study, as it believes that only through it will the real cost of the construction, the operating costs, the completion time and any cost or benefit that Cypriot electricity consumers will have over a period of approximately 30 years.
