Our View: We cannot afford another costly energy mistake

Everyone was taken by surprise to hear on Tuesday morning news that there was agreement on the Great Sea Interconnector (GSI) and that the council of ministers was scheduled to approve the deal at its meeting on Wednesday. The main obstacle, the funding of the project, had been reportedly overcome during extended meetings until late Monday and an agreement was reached which had the approval of all interested parties – governments of Greece and Cyprus, the regulators of the two countries, the EU directorate-general for the environment and Admie, Greece’s power transmission operator that is undertaking the project.

By lunchtime on Tuesday everything had changed. Director of the president’s press office Victoras Papadopoulos told a CyBC television show there was no final agreement in relation to the regulatory framework for the electricity connection of Crete and Cyprus. Efforts to reach an agreement were in progress and people should be patient, he said. Was he referring to Greece’s government and Admie, which are the only parties not being patient? In fact, the type of pressure they have been putting on the Cyprus government to agree to the GSI has never been witnessed before in Cyprus-Greece relations. Even Tuesday’s widely reported news of a deal seemed designed to put pressure on the government.

Astonishingly, Admie is pushing for an immediate decision by the Cyprus government for a project estimated to cost €1.9 billion on the strength of a cost-benefit analysis that was made available last week. The finance ministry permanent secretary said in parliament last week that the ministry had not been given the financial details of the project that would enable it to carry out a technical due diligence study. The reason for Admie’s hurry was that Norwegian company Nexans, which would manufacture the cable for the GSI, had threatened to suspend all work if it did not receive a Full Notice to Proceed by August 31, a decision that would delay the project significantly. The warning was in a letter to Admie made public last Wednesday, presumably as another way of putting pressure on the government.

The immediate funding problem was overcome by the Cyprus government agreeing to pay €25m a year towards the project instead of imposing a levy on electricity bills – the money will come from the emission penalty fund. This however is not the only issue. Had the government explored other options that could be more cost effective and would not need until 2030 to be ready? Selling the idea of cheaper energy in five-and-a-half years’ time is not a convincing reason for backing the GSI. Then there is the issue of the so-called geopolitical risk (Turkish intervention in the project) that could prevent the project from ever being completed. Cyprus might even have to compensate Admie if this happened.

Some deputies, quite rightly, urged the government to exercise caution and explore other options before taking a decision. It is too big and expensive a project to be adopted without in-depth study of all its aspects, just because there is pressure from Greece. Too many costly mistakes have been made on energy matters, which people are paying for, and we cannot afford another one.