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Cyprus

The power struggle over the north’s electricity

Teknecik power station is due to end its economic life in 2024

By Aydin Calik

A heated dispute has erupted in northern Cyprus over a new energy agreement with Turkey – just as talks to reunify the island have reached a critical moment.

The deal aims to provide the north with cheaper, cleaner electricity via an undersea cable, but critics in the north fear it will increase the Turkish Cypriots’ dependency on Turkey.

The Greek Cypriots, too, are angered by the provisional agreement, viewing it as further evidence – following a Turkish water pipeline to the north – that Ankara has no intention of ever letting the north sever its umbilical cord with Turkey.  They filed an official protest with the United Nations earlier this week.

The complaint drew attention to the existing grid connection between the north and south, part of the two leaders’ confidence building measures package, and that the two sides have on occasions sold electricity to each other.

Yet, the aim of interconnecting the electricity systems between the north and Turkey would appear to be a rational endeavour for the Turkish Cypriots, on the surface at least.

'Finance Minister' Serdar Denktash
‘Finance Minister’ Serdar Denktash

In an interview with Kibris TV, ‘Deputy Prime Minister’ and ‘Finance Minister’ Serdar Denktash said the main aim in signing the ‘Energy Cooperation Agreement’ with Turkey is to secure ‘cheaper, cleaner and constant electricity’.

He also stressed it was only a ‘framework agreement’. The details would be worked out later.

Signed on 11 October, the agreement also includes mutual cooperation in renewable energy and exploration of oil and natural gas resources.

Kalecik power station
Kalecik power station

The current unit price of electricity in Turkey is roughly 0.14TL (€0.04). In the north, it is 0.60TL (€0.17) and in the Republic it is (€0.15). There are obvious advantages for the Turkish Cypriots, who rely on inefficient diesel and thermal power generators, to tap into the gigantic Turkish electricity market.

‘Economy and Energy Minister’ Sunat Atun, who signed the agreement, said it was essential for the north to be included in the region’s emerging energy picture and be connected to the European grid. “This is a global move. It also means cheaper electricity for us.”

Interconnecting grids allows utilities to draw power from more efficient sources. It also allows countries to access cheap bulk energy by getting power from different sources such as hydro, solar and wind. Buying and selling excess production decreases energy costs in the long run.

But since the signing of the agreement, politicians and academics have been quick to express reservations.

Ayla Gurel, a senior research consultant at the Prio Cyprus Centre (PCC), told the Sunday Mail there should be much more openness, transparency and public participation in the process.

“There doesn’t seem to be a coherent plan here, what is the master plan? There isn’t one. We don’t want to be constantly fed things to us by Turkey.”

Gurel says Turkey is once again framing the plan as if they are making sacrifices for their Turkish Cypriot ‘brothers’.

“We are not going to reach a good deal with this sort of attitude,” she said. “We are left with the impression that Turkey is trying to integrate north Cyprus into Turkey.”

Alluding to the water pipeline crisis that erupted early last year, which ended in the collapse of the CTP-UBP coalition government, Gurel said that lessons should be learned from this episode.

The coalition collapsed on April 5 because of deep divisions over the distribution and sale rights of the water from Turkey.

The 80km-long subsea pipeline was completed in September 2015, piping water from Mersin, Turkey, to a receptor station in Kyrenia. The pipeline, a €500m project, is expected to transfer 75 million cubic metres of water per year to northern Cyprus.

The 80km-long subsea water pipeline was completed in September 2015
The 80km-long subsea water pipeline was completed in September 2015

Ankara demanded that the water distribution system in the north be privatised, effectively cutting an important source of revenue for municipalities, to which CTP was strongly opposed.

The stalemate delayed the signing of the Turkey-‘TRNC’ financial protocol, starving the Turkish Cypriot administration of much needed loans – de facto donations – which led to a financial crisis. When public servants’ salaries couldn’t be paid, UBP pulled out.

Then, there is the question as to whether the interconnector project is even feasible. Two studies, one commissioned by Kib-Tek, the ‘state’-controlled electricity authority in the north, and a more recent one by the ‘Chamber of Electrical Engineers’ said it was.

Almost all electricity in the north is produced using fuel oil, which creates high levels of environmental pollution, harbours the risk of oil spillage into the sea – as happened in 2013 at the Kalecik (Gastria) power station – and causes an increase in sea temperatures.

The Kib-Tek operated Teknecik power station is due to end its economic life in 2024 and the guarantee of purchase agreement with the privately owned, Aksa-operated Kalecik power station ends in 2024.

According to the electrical engineers’ report, the north currently consumes on average 1,200 billion kilowatt hours (kWh) per year. The 700 million kWh generated from the Aksa plant in Kalecik and 500 million kWh from Teknecik amounts to around 840 thousand tons of CO2 emissions per year.

The United States Environmental Protection Agency estimates one ton of CO2 has a social cost of around $40, bringing the total cost in the north to $33.6 million per year.

This colossal damage to the environment is not going unnoticed. President of the Green Action Group Dogan Sahin stresses the need for more investment in renewable energy.

“The TRNC has to increase its renewable energy sources in solar, wind and even in wave power,” he told the Sunday Mail.

“With a few years’ investment, 50 per cent of north Cyprus’ electricity demand can be met through these sources.”

The electricity cable, he fears, would endanger such an opportunity. “If it is going to get rid of the TRNC’s own production capabilities, then I do not support it,” he said.

Similarly, Communal Democracy Party president Cemal Ozyigit said that “nobody is opposing agreements with Turkey, but if they sideline our institutions and make us dependent, we don’t want such agreements.”

The proponents of the cable say it offers cheaper, cleaner electricity with the opportunity to diversify production. But Hasan Ulas Altiok, an economist at the Eastern Mediterranean university disputes this.

“Given the current price of oil, exchange rates and the wholesale electricity price in Turkey, the proposed cable is not feasible,” he told the Sunday Mail.

Altiok says decisions should not be made based on a “snapshot” of the current picture and that a serious study must be undertaken.

He also said the claim by the electrical engineers’ chamber was misleading because it failed to include the costs of keeping back-up power production on the island for when the cable experiences faults and needs to be maintained. When the cost of keeping current power plants operational is factored in – paying employee wages, maintenance costs – the electricity cable becomes “unfeasible”.

Like Ozyigit, Altiok stresses the importance of ensuring the energy independence of the north.

“We need to buy natural gas stations and diesel stations and get rid of the thermal power generators. There is no way around it,” Altiok said, adding that with the guarantee of purchase agreement ending in 2024, the money the north pays to Aksa for two years, the Turkish Cypriots could easily buy their own power plant.

An added issue is whether a future electricity cable would connect northern Cyprus to the continental European grid via Turkey or just a power station in Turkey.

'Economy and Energy Minister' Sunat Atun (left) signing the agreement with Berat Albayrak, the Turkish energy minister
‘Economy and Energy Minister’ Sunat Atun (left) signing the agreement with Berat Albayrak, the Turkish energy minister

While Turkey is connected to the European grid and is an observer member of the European Network of Transmission System Operators for Electricity (Entso-e) it may prove difficult to add the north to the network.

Spokesman for the Transmission System Operator in the Republic, George Ashikalis, told the Sunday Mail, “there is a clause in the agreement between Turkey and Entso-e that states it cannot connect to another grid without the approval of other members.” This clause was apparently added at the Republic’s insistence during Turkey’s negotiations to connect to the network.

Without a solution to the Cyprus problem, it is highly unlikely that the Greek Cypriots will agree to the north being connected European grid, though it is unclear what steps the Republic could take to prevent this from physically happening.

Meanwhile in their protest letter to the UN Secretary General Ban Ki-moon earlier this week, the Republic denounced the energy agreement between Turkey and north Cyprus.

“It constitutes yet another deliberate act of provocation by Turkey aimed at further consolidating its effective political and economic control over the occupied part of Cyprus, deepening the existing division and creating new faits accomplis on the ground,” the letter said.

The existing electricity grid connection between the north and south means that if the cable goes ahead, Turkey would in theory be indirectly connected to the south.

Factor in the EuroAsia Interconnector project, an agreement made between Greece, Cyprus and Israel to interconnect each other via an undersea power cable, then an opportunity to develop the island as an energy hub appears to be emerging.

Oil spill at Kalecik power station in 2013
Oil spill at Kalecik power station in 2013

Atun says, with the Turkey-north Cyprus agreement, it would also be possible to share this electricity with countries south of the island. Referring to the Greek Cypriots he called for cooperation, adding “let’s set up a joint transmission office together”.

If the two sides do manage to overcome this week’s deadlock in the talks and reach an agreement such suggestions might not sound so far-fetched.

This assumes that in the event of a solution, the Greek Cypriots give the go ahead for the project, as it is looking increasingly unlikely that a constituent state alone would be able to make such an agreement without the consent of the federal government.

But what is Turkey’s stake in this? “There are people who say Turkey is making all of these investments because it knows there will be a solution,” said Gurel.

“Therefore, Turkey is making sure it is attached to the island in all sort of ways, like with the water pipeline and now with the electricity cable.”

Since the failure of the Annan plan in 2004, state and private investments from Turkey have increased significantly. So, in the case of a federal solution, Ankara would be locked into the island through the Turkish Cypriot constituent state and gain a foothold in the EU.

Whatever the current criticisms and issues, as things stand, the project looks likely to go ahead, according to Atun.

“With this cable, electricity will be cheaper, but even if it isn’t, it will come.”

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