Benefits of cable sought before investment decision made

The government has asked Greece’s Independent Power Transmission Operator (Admie) to carry out a cost-benefit analysis that would then allow Cyprus to decide definitively on whether to invest directly in a mooted subsea power cable, the energy minister said Tuesday.

Admie is the project promoter for the Great Sea Interconnector – aiming to link the electricity grids of Cyprus, Greece and Israel. Previously known as the EuroAsia Interconnector, its cost has been estimated at €1.9 billion.

Cyprus earlier indicated it wanted to participate as a direct stakeholder in the project, investing as much as €100 million.

Energy Minister George Papanastasiou explained that because the project was previously under the auspices of a different promoter – the eponymous EuroAsia Interconnector Ltd – the government now wants an updated cost-benefit analysis.

“This study should have been done some time ago, before we came to our initial investment decision,” the minister told journalists.

He recalled that the initial investment decision was taken on February 14 of this year. But a new cost-benefit analysis, reflecting current circumstances, is imperative before Cyprus can take its final investment decision.

Taking questions, Papanastasiou said the updated analysis would show the sharing of costs between the two countries – Cyprus and Greece – because “the energy environment is a dynamic one, and may have changed in the meantime.”

Also, the final investment decision means that stakeholders in the project must also undertake a responsibility to secure financing.

“If we deduct the €658 million, which is the grant [from the European Commission], the remaining €1.2 billion must come from loans,” Papanastasiou said.

“That’s the important part… the Republic of Cyprus needs to be aware of what responsibilities it undertakes [as a shareholder] in order to know what is the benefit to the Cypriot consumer who right now faces very high electricity prices.”

The minister stressed that the purpose of the power cable project is to drive down the cost of electricity.

Last month, Admie officials held a meeting with the Cypriot finance minister, whom they urged to speed up Cyprus’ decision to invest the €100 million.

It’s understood that Admie plans to set up a holding company and then seek to raise equity for the subsea cable project. The Cypriot state would become a shareholder in this holding company.

Greece’s Admie is 51 per cent owned by the Greek state. The State Grid Corporation of China has a 24 per cent stake, with the rest owned by other investors.