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Our View: Holding on to EAC, for all the wrong reasons

ELECTRICITY Authority of Cyprus (EAC) unions went of the offensive as soon as the study about the future structure and ownership of the power company, commissioned by the government, was made public. The political parties, with the exception of Disy, will follow suit as they have been as opposed to privatisation as the unions.

They all want to keep the EAC in state hands. The unions are determined to preserve their power and safeguard the high wages and super-benefits enjoyed by their members, while the parties want to keep at least one big state organisation at which they would have control, admittedly for all the wrong reasons. With the privatisation procedure for the Ports Authority and Cyta already underway, the EAC would be the only organisation left for the parties to use to win votes.

The government, meanwhile, which invariably panders to public opinion, has tried to find a middle way, which was reflected in the study it had commissioned from energy and environment consultants Exergia SA. The consultants unbundled the various activities of the EAC and proposed the establishment of two different entities – one dealing with generation and supply and the other administering the power grid through three different business units. It proposed that the state had the controlling stake, while a minority shareholding and management would be given to the private sector.

This was the ownership model the government had wanted all along, as it hoped to satisfy the unions and parties by maintaining state control, as well as the troika by restructuring the EAC and allowing limited privatisation. It could now tell the troika that full privatisation could take place a few years down the line. What nobody had mentioned is that this ownership model is exactly the same as that of Cyprus Airways which ended in the bankruptcy of the company.

State control of any business, as had been proven time and again, is a recipe for disaster, because clueless politicians and their placemen would keep running things. And if the energy market is opened to competition – a government obligation – it is difficult to see a cumbersome state controlled company surviving, especially as there are cheaper ways of generating power than the conventional methods used by the EAC.

In fact, opening up the market and attracting companies that could produce electricity more cheaply should be one of the main objectives of the slated privatisation and not how to maintain state control of the EAC in order to keep the clique of unionists and politicians, who seem to run the country, happy.

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