Cyprus Mail
Cyprus

EAC: Russian company bitter over failed bid

EAC chaiman Charalambos Tsouris

By Poly Pantelides 

THE Electricity Authority’s (EAC) chairman suggested yesterday that Russia’s Itera, with whom talks on the interim supply of natural have broken down, was “bitter”.

The EAC was referring to Itera’s request that the tenders process be scrutinised by the auditor general.

EAC chairman Charalambos Tsouris was responding yesterday to announcement on Thursday by the Natural Gas Public Company DEFA that talks with the preferred bidder were officially at an end because the Russian firm was not willing to further revise its offer, which it thought was adequately cost-effective.

But the bid was deemed too expensive by the EAC and DEFA. “Let’s not forget Itera is a bidder. Unfortunately its offered price did not lead to a contract. It was expected [and] understandable that the company would react in all of the ways it judged necessary,” Tsouris said.

But speaking on behalf of Itera, former commerce minister Nicos Rolandis confirmed reports that the vice-president of the Itera Group, Vladimir Makeev, met President Nicos Anastasiades on Wednesday and secured an agreement to have the auditor general take a closer look. Sources said this would involve particularly the later-stage talks between DEFA and Itera.

Rolandis said Itera had not withdrawn from the tender process, but had made it clear that it considered its offer reasonable and could not push it any lower. Tsouris however insisted that Itera’s offer would have raised the cost of electricity.

The EAC says anticipated drops in electricity demand because of the debt crisis, means there is a need for less fuel which pushes up the price per unit thereby rendering Itera’s price unattractive.

Tsouris yesterday accused the media of “demonising” the EAC to give the impression they were not committed to an interim natural gas supply. “Why would any bidder put in an extra effort to lower the price,” given the media’s “demonisation” of the process? he said.

DEFA’s tender asked for the provision of natural gas from September 2015 to late 2018, with an option for a 15-month extension. This is to cover needs before Cyprus can use its own reserves. Eurostat figures show that household electricity prices in Cyprus are the highest in the EU, with the island currently relying on expensive diesel and heavy fuel oil for its energy needs.

Under the terms of the tender, DEFA is not obliged to pick a supplier if it deems that the price of electricity does not drop significantly through the use of natural gas, though the definition of a significant drop is subject to dispute between Itera, and DEFA and the EAC.

The dispute revolves precisely around defining what a significant drop in electricity price is, with Itera and DEFA/EAC apparently disagreeing on core assumptions.

It’s understood that the tender itself has not been scrapped. DEFA can now presumably initiate talks with Vitol, whose bid was ranked second-best in terms of price and proposed delivery date.

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