Fears cost-benefit analysis of Great Sea Interconnector lacks evidence

Without transparency and proper financial analysis, the Great Sea Interconnector risks turning into a bane for Cypriot consumers, the House commerce committee chairman said on Wednesday.

Disy MP Kyriacos Hadjiyiannis, speaking to state broadcaster CyBC, charged that the recently secured cost-benefit analysis received by the energy ministry from project promoter Admie was lacking in solid evidence.

Two weeks ago, the energy minister took formal delivery of the cost-benefit analysis for the mooted electricity subsea cable linking Crete to Cyprus to Israel, which is meant to make electricity cheaper for consumers.

Hadjiyiannis said inordinate pressure was being exerted on the energy regulating authority (Cera) to accept a proposal by the Greek power transmission operator (Admie).

As it stands, the MP said, the entire process suffers from an absence of transparency with closed door meetings taking place between Admie, Cera, the energy minister, EU counsellors and subcontractors, leaving MPs uninformed.

Accepting the project without caution risks the nightmare of Cyprus having to take on the whole burden of the project’s geopolitical risk, the MP added, something the investor naturally favours by default.

Meddling by the energy minister, as well as by the European committee, can bring Cyprus out of synch with actual realities of the project, Hadjiyiannis cautioned.

“It is unacceptable for an independent energy authority [Cera] to be pressured in this manner to alter its own decision,” he said. “It is an independent body for a reason.”

Admie, co-owner of the project, has pushed for a levy of 0.6 cents per kilowatt-hour to be imposed on consumers in Cyprus and in Greece as of January 2025, before the interconnector goes live. The goal is to allow Admie to recover part of its €1.9 billion construction cost.

According to reports Admie has estimated the cost at €25 million euros annually from early 2025 to 2030, totalling €150 million, with an annual user charge of €30 euros, which is considered small compared to the benefits for Cyprus.

But Hadjiyiannis countered that this was unfair, saying, “you can’t compare Cyprus’s [population of] 1 million shouldering the costs of a 63 per cent share with Greece’s ten to 11 million taking on a share of 33 to 34 per cent.”

The operator’s chairman Manousos Manousakis had promised that Cypriot consumers would “recoup the cost” within the first year of the interconnector’s operation, while in its cost-benefits analysis the stakeholder claimed electricity bills would fall by as much as 30 per cent by 2030.

Cera, however, threw a spanner in the works, issuing the decision that consumers in Cyprus should pay nothing before the cable goes operational.

Hadjiyiannis took to task political parties as well as the finance ministry for their “silence” over the entire matter, claiming that the latter surely held a different view on the developments.

“What if the increases [in budget estimations] keep happening, will these [added] costs also be pushed onto Cypriot consumers the next time?” the MP questioned, referring to a revision of costs from an original €1.4 to €1.9 billion.

Energy Minister Giorgos Papanastasiou has warned that, absent some guaranteed funding, the European Commission might withdraw its pledged €657 million grant.

Hadjiyiannis said that although the previous government ought to be held accountable for the mess it had delivered in terms of the project, “the mistakes of the past should not be repeated”.

“A viable plan cannot be based on claims,” he said, adding that neither measurable outcomes, nor the timeframe, nor a proper assessment of geopolitical risk had been provided for in Admie’s latest analysis.

It is worth noting that Turkey’s move on Tuesday to deploy five navy vessels off Kassos and Karpathos in the Aegean Sea while an Italian ship was carrying out depth surveys for the Cyprus-Crete leg of the connector, raised concerns among stakeholders in both countries.