After almost a year, MPs on Monday resumed discussion of a government bill providing for the creation of a National Investment Fund to manage future hydrocarbons proceeds.
The bill, drafted by the finance ministry, was submitted to parliament in June 2016; the first discussions in parliament got underway in mid-September of that year. The last time the bill was discussed was in May 2017. The International Monetary Fund had been consulted during the bill’s preparation.
Averof Neophytou, chair of the House finance committee, told reporters that a different format has been decided going forward: rather than MPs submitting their amendments to the bill at the House plenum, as per normal legislative procedure, the committee would now be discussing the amendments exhaustively before the item goes to the House floor.
MPs have been given a week to submit any additional amendments to the bill, he said. The amendments are to be immediately relayed to the finance ministry, which will provide its own feedback, after which a final discussion will be held in committee before a vote takes place at the plenum.
According to Neophytou, the fund’s revenues are primarily geared at future generations of all Cypriot citizens – Greek and Turkish Cypriots, as well as the religious minorities.
But responding to questions, he dismissed the notion that the impetus for revisiting the bill were the recent events in Cyprus’ economic waters, where Turkey prevented the drilling of a gas well and with Turkish Cypriots now calling for joint exploration and exploitation of offshore hydrocarbons.
For the finance committee, Neophytou said, there is no linkage with that issue. The investment fund for hydrocarbons was significant, whether there is a solution of the Cyprus problem or not.
The Disy MP added that, at any rate, proceeds from hydrocarbons should not be expected for a while yet, given that a commercial agreement for developing the Aphrodite field – holding an estimated 4.5 trillion cubic feet of natural gas – is still pending.
For his part, Diko deputy Angelos Votsis said the hydrocarbons fund has been designed on the basis of the Norwegian model.
Main opposition Akel reiterated that absent from the bill is any clause relating to the state channelling revenues to hydrocarbons-related infrastructures.
Under certain circumstances, the government will be able to use part of the revenues to reduce government debt and for other purposes.
The bill stipulates that as long as public debt is above 80 per cent of GDP, half the hydrocarbons revenue would go towards reducing this debt. When it is below 80 per cent but above the limit of 60 per cent – set by the Maastricht criteria – only 25 per cent of revenue would go towards the public debt and the rest would be used for the creation of reserves.
Last month Turkish warships, on the pretext of conducting military exercises in international waters, prevented a drillship from reaching its target in offshore block 3.
The rig, contracted by Italian oil major ENI, eventually withdrew and the planned drilling was cancelled.