The French survey ship is off Kasos and Karpathos as Cyprus prepares to release the first instalment, which could face scrutiny under EU state aid rules.
The French research vessel Abeille Marengo moved into waters off Kasos and Karpathos around midnight Wednesday to begin seabed surveys for the installation of the electricity cable linking Cyprus and Crete. With attention focused first on how Turkey responds at sea, Cyprus is limiting itself for now to the steps it considers strictly necessary, in line with Greece’s approach.
At a later stage, however, Cyprus will also have to address practical matters related to the project, including payments it owes to the project developer. One of those payments is the first of five annual instalments of €25 million to recover project costs, a portion of which is passed on to electricity consumers in Cyprus and Greece. The instalments are due at the end of each year, starting in 2025.
Cyprus’ energy regulator approved the first instalment, due in 2025, but the funds have yet to be released after Finance Minister Makis Keravnos voiced strong reservations about the project’s viability. President Nikos Christodoulides eased some of the opposition by saying the funds would be released once work on the project resumed, with the issuance of a Greek maritime notice, known as a NAVTEX. The payment could still be delayed further.
Payment process set to begin
After Greek authorities issued the NAVTEX, government sources told Kathimerini that the steps needed to pay the first €25 million instalment to Greece’s Independent Power Transmission Operator (ADMIE) would begin, in line with the president’s assurances. When the payment will be made remains unclear.
One possible complication is that Cyprus’ contractual payment could run into scrutiny from the European Commission’s competition department. Sources familiar with the process told Kathimerini there was a real risk that paying €25 million to a private company could be deemed state aid, prompting the department to intervene and block the payment.
The same sources said a levy should already have been added to electricity bills, alongside the government subsidy announced to shield consumers from the charge. That leaves Cyprus with two options. It could seek more time before it starts paying the instalments, or it could temporarily raise the levy, with the government subsidizing it, to collect enough to cover both the 2025 and 2026 payments.
Hurdles in Nicosia, too
The procedures government sources referred to also include steps Cypriot authorities must take before the €25 million can be released. The Commissioner for State Aid Control will play a decisive role in determining whether the payment of public funds to a private company constitutes state aid and conflicts with EU rules.
