Cyprus Mail

Troika studying EAC proposals

THE GOVERNMENT has forwarded to the troika its draft proposal regarding the legal unbundling of the Electricity Authority of Cyprus (EAC) and is expecting the lenders’ feedback in a few days, Energy Minister Giorgos Lakkotrypis said on Monday.

“We are still at the consultation stage for the decision that the cabinet is to take on this matter,” Lakkotrypis told reporters.

“Let us not forget that we are not alone, we have obligations stemming from the bailout agreement, so the more we say in public the harder we make matters.”

The troika’s response and comments on the government’s proposal for the EAC were expected in a few days’ time, he added.

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

The government’s proposal, sent to the troika last Wednesday, 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 expect a road-map for implementation of the cabinet’s decision by 2017.

The government’s proposal was formulated after a meeting with the EAC’s board. The unions did not attend.

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.

Now, it’s understood, the government is proposing to the troika that this month it will take a “preliminary decision” 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 lenders 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.

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”.


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