Cyprus Mail

EAC fears loss of investment capital


The Electricity Authority of Cyprus (EAC) on Monday said it is opposed to the planned reinstatement of the dividends policy by which the state-run entity will again be required to divert part of its surpluses to the treasury.

Speaking in parliament, EAC head Emily Yioliti said bringing back the dividends would deprive the state-run power corporation of capital needed for investment.

Under a 2006 law, the EAC was subject to a dividends payout to the state based on its after-tax surplus over the previous fiscal year. The maximum amount payable in any year was set at 10 per cent of after-tax accumulated surpluses at the end of the previous fiscal year.

But under a cabinet decision in August 2008, the organisation was temporarily exempt from paying dividends, on the grounds that its earnings had declined due to special discount rates offered to certain categories of households.

Then in 2011, following the explosion at Mari naval base and the damage to the main power plant at Vasilikos, the law was amended formally exempting the EAC from the requirement to pay out dividends.

Now, the government has tabled legislation reinstating that requirement. Citing the EAC’s audited accounts, the bill states that the entity’s surpluses have grown considerably, rising to €1.3bn at the end of 2017 from just €0.7bn back in 2007.

Talking with MPs, Yioliti also complained about a government decision obliging the EAC to participate to the tune of 30 per cent in investments for the creation of natural gas infrastructures.

The organisation has been presented with a fait accompli, she said.

The EAC has been asked to disburse €43m to co-finance the construction of a floating storage and re-gasification unit at the harbour at Vasilikos.

An energy official countered Yiolitis’ assertions, saying the EAC had agreed to participate in the investments.

The only dispute was the manner in which the €43m would be disbursed – either piecemeal or as a one-off payment.

The same official said the EAC needed to provide this amount as soon as possible, because complementary funding from the European Investment Bank for natural gas infrastructures hinged on it.

For 2019, the power corporation’s budget provides for expenditures of some €1.3bn, compared to €937m last year.

The organisation’s capital expenditures are €359m – €163m more than in 2018 – due to planned investments in increasing production capacity, installation of anti-pollution systems, and works to complete the conversion of turbines so that they can burn natural gas instead of heavy fuel oil.

The budgeted expenditures include €150m for contingencies, such as for possible higher costs of purchasing fuel due to rising oil prices.

MPs from the ruling Disy party urged the EAC to cut down on its operating costs, so that the entity might become competitive once the market opens up.

By contrast, Akel deputy Stefanos Stefanou said the reason why electricity prices are high is because of the reliance on mazut. He blamed the government for the delay in switching to natural gas.


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