By Angelos Anastasiou
The Electricity Authority of Cyprus (EAC) pension fund managing committee will decide on Tuesday whether or not to renew the €100 million loan it granted the Cyprus government, which expires on March 19.
The semi-state organisation (SGO) had agreed to lend cash out of its employees’ pension fund in December 2012, following stark warnings of imminent default issued by the government.
“If these additional financing needs are not secured we will be talking about a state default in the next few days,” finance ministry permanent secretary Christos Patsalides had then told the House Finance Committee.
At the same time, a further €100 million was loaned by semi-governmental telecoms company CyTA and some €20 million by the Ports Authority.
The four EAC employee unions and the company’s new government-appointed president Othonas Theodoulou met on Monday ahead of Tuesday’s session, with the unions vehemently opposing the renewal of the loan.
In a letter to the EAC board, the finance ministry has requested that the loan be extended to April 19.
The EAC’s pension fund managing committee comprises nine members, of whom seven are government-appointed – five board members, the general director and the financial director – and two are union representatives.
Renewing the loan requires a simple majority and it is therefore understood that the government can get its way regardless of union wishes.
However doing so would further strain the relationship between the government and the SGOs employees, already tested in previous weeks when the government submitted – and eventually passed – a privatisation bill for SGOs against which employees protested heavily.
Politis reported sources from within the unions on Monday denying that calling in the loan was a retaliatory measure against the government’s privatisation policy, and arguing that the decision had been made several months ago.
The expected clash also comes two days after the employees’ unions broke ranks and issued a statement against the EAC’s executive board decision to seek a court-mandated reversal of the regulatory body CERA’s reduction of the power company’s tariffs by 8 per cent.
That is because the unions suspect the EAC’s board – supposedly in line with government policy – of trying to inflate the power company’s profits with a view to rendering it an attractive investment proposition when the time to privatise comes.
“Unfortunately the views of EAC employees have been fully vindicated, as immediately following the voting of the privatisation bill into law, the Cypriot consumer gets a taste of what is to come,” the unions’ statement reads.