Cyprus Mail

EAC ‘unbundling’ plans proceed, Cyta unions furious over simulation (2nd update)

By Angelos Anastasiou and Elias Hazou

THE government and the state power company – but not the employee unions – on Wednesday jointly hammered out a proposal to be passed onto the troika regarding the legal unbundling of the EAC.

With unions insisting that government plans to approve a draft decision to split the state-owned EAC will be met with strong reaction, Energy minister Giorgos Lakkotrypis met with the power supplier’s board on Wednesday morning.

The agenda revolved around a draft decision slated for cabinet approval on Monday.

A final decision for the efficient and effective splitting up of the EAC is a “prior action” for the release of the next tranche of Cyprus’ bailout programme.

Lakkotrypis and the EAC board were able to agree on the final draft of the government proposal, which will now be forwarded to the troika for scrutiny and recommendations.

The proposal calls for breaking up the EAC into two separate organisations, a distribution monopoly and a power-producing entity that will compete in the liberalised electricity market.

In January, Cyprus’ international creditors must receive a road-map for implementation of the cabinet’s decision by 2017.

But EAC employee unions have deemed the government’s proposal “unacceptable” and warn that its approval will “force unions to taking dynamic measures, resulting in the disturbance of labour peace”.

Under the revised memorandum of understanding, Cypriot authorities were to take a final decision on the legal separation of the EAC by the end of this year, so that the preparatory work would be carried out starting next year and the relevant legislation passed by end-2017.

EAC sources, knowledgeable about what was discussed during the three-hour meeting with Lakkotrypis, spoke of a “compromise”.

Now, the Cyprus Mail is told, the government will be proposing to the troika that this month it will take a “preliminary decision” – via the cabinet – on the EAC’s ownership unbundling. It will ask the lenders for a one-year cushion – until the end of 2016 – to make a definitive commitment on the issue.

Effectively the government will be requesting from the troika a one-year window, but with the key difference that by end-2016 the government does not guarantee to set the unbundling process in motion, but rather to merely inform the troika of its decision either way.

Essentially the government is playing for time, hoping to satisfy both the troika and the EAC’s trade unions, who are threatening strikes.

The situation is fluid, as the international lenders might reject the government’s proposal – although the EAC sources said they were given the impression that this was not the case.

It’s also understood that at the same cabinet session – which could take place on Monday – the government will likely rescind a ministerial decree – issued previously – calling for the EAC’s privatisation.

Meanwhile, also on Wednesday state telecoms company CyTA’s employee unions decried a letter by the Privatisations Commissioner asking the board to set up teams to carry out simulation exercises, which would prepare the organisation for the smooth transition to a new private-law company.

Commissioner Constantinos Herodotou’s act was “unacceptable” and he should retract it, union rep Alecos Tryfonides said.

CyTA’s employee unions stand squarely against the government’s plan to create a private-law organisation that would take over the state-owned provider’s operations and assets, because the new company will be subject to privatisation.

“This act by the commissioner lies outside his legal and institutional mandate, and we demand that he retract his letter the soonest,” Tryfonides said.

“This letter predetermines decisions that are yet to be made by parliament. Otherwise the commissioner is out of line and his resignation may be called for.”

Reaction against Herodotou notwithstanding, the unions said CyTA’s board of directors is also answerable over the issue.

“The letter essentially says that actually creating the simulation teams is at the board’s discretion, therefore it is not let off the hook,” union rep Elias Demetriou said.

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