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Lakkotrypis: interim gas supply must be a priority for DEFA

By Staff Reporter

Energy Minister Giorgos Lakkotrypis on Wednesday held his first meeting with the new board of the Natural Gas Public Company (DEFA) making it clear, he said, that its priority must be the advent of natural gas for electricity generation.

“We discussed the importance of bringing this to fruition,” the minister said after the meeting.

Lakkotrypis said the goal was to have natural gas used in electricity generation in 2016.

DEFA last week extended the timetable for submission of proposals for an interim gas supply to April 14. The so-called interim solution calls for the importation of natural gas to facilitate cheaper power production as a stopgap until local resources become available, from 2016 to 2024, with an optional extension period to 2026.
“It’s a large competition and possibly one of the biggest contracts, if not the largest contract, which will the Republic of Cyprus will negotiate through the DEFA and as much time  as needed will be taken to ensure the procedures are correct6,” said Lakkotrypis.

DEFA is by law the sole importer and distributor of natural gas in Cyprus. Once it concludes a deal for natural gas with a supplier, DEFA would then sell the fuel to the Electricity Authority of Cyprus. Any contract therefore requires back-to-back agreements – one between DEFA and the supplier, the other between DEFA and the EAC – that are in sync with each other.

The EAC has raised a number of concerns over a possible gas sales agreement. It does not want to be saddled with more gas than required for the grid, particularly if the need for conventional fuels drops in coming years due to the increased penetration of other energy sources, such as photovoltaic and solar plants.

A supply deal for natural gas could be thrown into limbo unless the EAC gets on board, although the government could theoretically override the electricity utility.

Last week the EAC denied reports it was hindering the process for the supply of natural gas as an interim solution in a bid to stifle competition.
Lakkotrypis said the EAC’s concerns had been noted and would be discussed with President Nicos Anastasiades.

New DEFA chairwoman Elena Vassiliadou said the new board comprised a number of people from the private sector who had the necessary knowledge and experience in the sector.

“I am confident that we will all work jointly to achieve our goals,” she said after the meeting.

 

 

 

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