Great Sea Interconnector ‘effectively dead’ if EU Commission withdraws funding

The government is concerned the European Commission may withdraw its €657 million subsidy for the electricity connection between Cyprus and Greece through the Great Sea Interconnector project, Energy Minister George Papanastasiou said on Thursday.

His statements come as Greece’s Independent Power Transmission Operator (Admie) called the project not viable and stakeholders said it was a sinking investment.

The developments are a result of a decision by Cyprus’ Energy Regulatory Authority (Cera) to reject the idea of imposing a €0.6 cents levy on consumers per kilowatt hour starting January 1, 2025.

The levy would allow Admie (who is implementing the project) recover the €1.9 billion construction cost.

Papanastasiou’s statements highlighted the issue was turning political. “It is a matter of time before the Greek government reacts.”

On Wednesday evening, Admie’s top brass met with the Greek Premier Kyriakos Mitsotakis and Environment Minister Theodoros Skylakakis

“What concerns me more as energy minister is not Admie’s reaction, but that of the European Commission which is offering €657m” to connect member states’ electricity grids, Papanastasiou said.

“If the EU Commission makes the decision to withdraw this €657m, the project is effectively dead.”

He added he would have a teleconference with the Commission next week.

Earlier this week, Cera announced it was rejecting four proposals linked to the project:

• The €0.6 cents levy on consumers per kilowatt hour
• A change of methodology for calculating the rate of return on capital
• Additional financial guarantees for the project
• The lifespan of the project set at 25 years rather than 35

Papanastasiou had warned that although it may sound beneficial to consumers, it would risk sinking the project in its entirety.

The development prompted CEO and chairman of Admie Manousos Manousakis to say in an interview with CNA that this was raising questions over the confidence of the project.

Greece has already committed to the project and the amount Cypriot consumers are called to pay €0.6 cents per kWh which is a cost “that will be recovered from the reduction in electricity bills from the first year of operation,” Manousakis stressed.

“I also want to make it clear that Admie has the financial strength to build the project, but under the circumstances created by this regulatory decision no investor would become a shareholder.”

If the decision is not changed in the next few days “the project will end.”

On Thursday, Papanastasiou added that Cera has made its decision which should be respected for the time being but if Admie wanted to position itself differently then it should submit the necessary documentation to Cera.

“In such a case, Cera will likely change its decision. It needs to be substantiated and not just saying that the project isn’t viable for PR purposes.”

Responding to a question on whether there were contacts with his Greek counterpart on the issue, Papanastasiou said that some clarifications were requested from the Greek energy minister and the deputy energy minister.

“They were only clarifying (questions) and it was not a matter of pressure“.