Cyprus Mail

EAC wrangle over dividends payout on hold

Legislators on Monday decided to put on hold discussion of a government bill reinstating the state power corporation’s obligation to pay out dividends to the treasury.

MPs had received a request from the finance minister asking that discussion be postponed until at least May 13, when a meeting will be taking place at the Palace between president Nicos Anastasiades and head honchos of the Electricity Authority of Cyprus (EAC).

This suited MPs fine.

“We are not willing to discuss a matter before the parties concerned sit down at the table to talk about it,” said Angelos Votsis, chair of the House finance committee.

He warned the government against taking any unilateral action without seeking the EAC’s feedback.

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.

The EAC itself vehemently opposes the move. It says the dividend payout will deplete its investment capital, at a time when the utility plans to upgrade or replace conventional fuel processing machinery.

The semi-governmental organisation has warned it may be forced to hike electricity prices to secure that capital.


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