By Elias Hazou
Unions representing workers at the Electricity Authority of Cyprus (EAC) said on Tuesday they would continue enforcing a work to rule but refrain from further industrial action, for the time being.
The power utility’s employees are not working overtime in protest at a government bill governing the establishment and running of public organisations and state-owned enterprises (POSE).
The House commerce committee on Tuesday undertook to mediate between the unions and the government in a bid to seek a compromise. In return, the workers said they would await the outcome of the mediation and promised not to escalate their measures in the meantime.
The POSE bill provides for a process that starts with drafting annual budgets and their timely submission in a unified form for all organisations. It also sets out the qualifications, responsibilities and procedure to appoint and dismiss boards and includes provisions about conflict of interest.
Another clause allows the government of the day to abolish, merge or sell off departments of these organisations without parliamentary approval.
However the bill also states that this does not pertain to public or semi-public organisations slated to be privatised.
It is understood the EAC is one of the entities earmarked for privatisation, although the government has shied away from stating this outright.
The EAC unions therefore want a reference inserted explicitly naming the power utility as being exempt from the bill.
Like other state enterprises to undergo privatisation, the EAC is exempted from most, but not all, of the bill’s provisions. It is exempted, for example, from the clause regarding the merging or closing down of departments.
But certain other clauses – such as holding the directors civilly liable for poor decisions, conflict of interest, or the directors’ appointment and selection process – do apply to it.
EAC unions suspect this would open a backdoor for the government of the day to control the organisation, and demand that their organisation be explicitly expunged from the bill.
Essentially the EAC is seeking to manoeuvre the government into wording the legislation in such a way that will definitively rule out denationalising the power utility.
Under an agreement with international lenders, Cyprus is to initiate a privatisation plan to help pay down a €10bn bailout.
According to the Memorandum of Understanding, this plan “should consider the privatisation prospects of state-owned enterprises (SOEs) and semi-governmental organisations (SGOs), including, inter alia, CyTA (telecom), EAC (electricity), CPA (ports), as well as real estate/land assets.”
But due to mounting resistance and threats of industrial action, the administration has been mincing its words on whether the EAC is to be privatised.
The unions also want the government to scrap new rules governing the energy market, currently being written up by the Transmission System Operator. The rules draw on a regulatory decision published in May by the Cyprus Energy Regulatory Authority (CERA) and proposing the unbundling of the EAC’s operations.
Under the ‘net pool’ model, the EAC’s operations are unbundled, and the production and supply operations separated. EAC Production will then strike bilateral agreements with suppliers for the sale of energy, at regulated prices.
This regime would apply to the bulk of electricity production. For the remainder of the capacity, which CERA has not settled on but estimates at 10 to 20 per cent, prices would be set dynamically, based on daily bids.
This would be done via the Day-Ahead Market, where half-hourly energy blocks are traded for the next day: participants submit offers/bids where they specify the quantity and the minimum/maximum price at which they are willing to sell/purchase.
The government plans to switch to a ‘competitive electricity market’ by mid-2016.
But the EAC claims that due to the small size of the energy market in Cyprus, the new regime being envisioned will ultimately lead to higher electricity prices for consumers.