Cyprus Mail
Cyprus

Government trapped between promises and obligations on EAC sell-off

By Angelos Anastasiou

The rejection of the government’s plan to unbundle, but not privatise, state-owned power producer Electricity Authority of Cyprus (EAC) into two state-owned entities by Cyprus’ international creditors brought things closer to a head, as the release of the next – and final – tranche of bailout money to the country is incumbent on the Troika signing off on Cyprus’ reform efforts.

The government appears caught between a rock – the Troika’s insistence on immediate steps for privatisation, or lose the last of the bailout money – and a hard place – its own promise to militant employee unions that the EAC will not be privatised. Its next planned move is to shift the issue from the technocratic level, where discussion has been held thus far, to the political level, with President Nicos Anastasiades engaging to persuade the Troika.

In a statement on Thursday, the energy ministry confirmed receipt of the Troika’s letter of response, but said it would not be commenting on the issue publicly until contacts have been concluded.

“Immediately on receipt, the Troika’s comments were forwarded to the EAC’s board and executive director, with whom the energy minister met with on Wednesday morning,” the statement said.

“Due to the sensitive nature of the issue, and the delicate handling required, the energy ministry will not make any public remarks on the issue until the necessary deliberations have been concluded.”

While privatisation of state-owned businesses – including the EAC and telecoms provider CyTA – was one of the original bailout agreement’s key terms, the government extended the power company’s privatisation roadmap by one year along the way, and, in the face of union warnings for “dynamic measures”, in recent weeks moved the discussion from denationalisation to unbundling while remaining in the state’s hands. A final draft of the compromise worked out between the government and the EAC’s board was flatly rejected by the Troika.

According to press reports, the Troika insists on privatisation, which the government has ruled out, and disagrees with the inclusion of various factors as likely to impact the unbundling course – including progress in talks for a settlement of the Cyprus problem, developments in the energy sector, especially in natural gas, and the EuroAsia Interconnector project, designed to connect the grids of Israel, Cyprus, and mainland Europe via a subsea cable.

“The Troika’s response to the government’s proposal includes many negative points,” EAC board chairman Othon Theodoulou said on Thursday.

According to Theodoulou, at a meeting between the board and Energy Minister Giorgos Lakkotrypis on Wednesday night, it was decided that a letter of response to the Troika will be drafted, most likely on Thursday.

The state power company’s employee unions claim they have been kept in the dark on the issue, but warned that any decision to unbundle or privatise the EAC – which union boss Andreas Panorkos deemed “one and the same” – is a “red line” for them, and will prompt their reaction with all the means at their disposal.

“However, we will wait and see, for the moment,” union reps told the Cyprus News Agency.

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