By Elias Hazou
ENERGY Minister Giorgos Lakkotrypis said on Monday he was confident that the government’s proposal for the future of the EAC would allay the concerns of EAC’s employees.
He was speaking to the press after his meeting with EAC chairman Othonas Theodoulou and the organisation’s deputy general manager Antonis Patsalis.
“The ministry has put forward certain proposals, today we received the EAC’s comments and these will be incorporated into the proposal which the cabinet will submit for a preliminary decision.
“We believe that the proposal prepared and the comments received today should allay the employees’ concerns,” said Lakkotrypis.
For his part, the EAC’s Theodoulou described the talk as a productive one, adding that “we shall all strive to come up with the right solutions.”
It’s understood that on Tuesday the EAC will be briefing the trade unions of what was discussed with Lakkotrypis.
Earlier this month, during a meeting with the EAC unions, President Nicos Anastasiades and Lakkotrypis pledged that the power company would not be privatised and remain in state hands.
This was a departure from the previous demands of the troika, which had wanted the EAC to be denationalised.
However the latest edition of the memorandum of understanding calls for the ownership unbundling of the EAC. Effectively, the state power company would be split into two separate legal entities governed by public law, that is, owned by the state.
One entity would be for production and supply, the other for transmission and distribution. Currently, the EAC is a vertically integrated organisation, in that it owns the entire supply chain.
Meanwhile, the clock is ticking for the government, which by the end of this month, or early January, must submit to the troika its final proposal for the future structure of the EAC as well as a road map for the ownership unbundling.
This is a “prior action” demanded by the international creditors for the release of the ninth and final bailout tranche.
EAC trade unions reject this flat-out, arguing that the unbundling would lead to higher operating costs and ultimately higher tariffs for electricity consumers. They also suspect it may be a backdoor through which the government may later try to sneak in the organisation’s privatisation.
Andreas Panorkos, the head of the EPOPAI syndicate, told the Cyprus Mail that the unions would wait for an official briefing. He did not rule out industrial action should the government proceed with the ownership unbundling. However no strikes or work-to-rule would be taking place during the holidays, he added.
The unions are willing to accept the accounting and operational separation of the EAC, but that is as far as they will go.
The accounting and operational separation is designed to prevent cross-subsidisation of the company’s operations.
Under the latest round of EU energy market legislation, known as the third package, Cyprus was granted a derogation to maintain a monopoly on transmission and distribution of electricity, but not on generation and supply.
On paper, power production and supply in Cyprus were liberalised years ago, but no independent producers – other than renewable energy sources – have entered the market.
A study on the EAC’s future carried out by energy consultants Exergia SA and commissioned by the government found no interest from private investors, chiefly due to the small size of the market combined with the considerable overheads.
“That is why it is hard to fathom the troika’s insistence, which borders on doctrine, that the EAC’s ownership must be unbundled,” EAC sources commented.
The sources suggested the government may now present to the troika a middle-of-the-road solution: it will agree to ‘study’ the unbundling, to carry out a cost-benefit analysis, but not commit to it definitively.
The government’s final position will be formulated at the cabinet meeting next week, where also the energy minister is expected to repeal a decree – now in force – calling for the EAC’s privatisation.