Yesterday, the Cypriot cabinet gave the go-ahead for the €1.9 billion project for the energy interconnection between Greece and Cyprus to move forward with the agreement with the Greek government and IPTO.  After weeks of a series of seminars, Cyprus has finally decided in favour of the Great Sea Interconnector just ahead of tomorrow's meeting between the Cypriot President, Nikos Christodoulides, and the Prime Minister, Kyriakos Mitsotakis, in Athens. 

NEXT STEPS 

The Cypriot Energy Minister, George Papanastasiou, in a briefing yesterday afternoon noted that the decision provides for an amendment to the existing regulatory framework regarding the recovery of costs of the implementing entity (Great Sea Interconnector). In the context of yesterday's decision, RAEK will proceed immediately to issue a decision to start recovering part of the costs of the implementing entity within 2025 and until December 2029. The recovery amount will amount to €25 million per year, which will come from state funds from the emission rights auction system. He said a supplementary budget would be submitted to Parliament for the first installment, while consumers would not be charged for the first five years of the project's construction. 

THE 2029 DEADLINE

However, if the interconnection is not completed within 2029, then GSI funding will be discontinued and will resume after the project is operational and consumers will be charged. Additionally, if the cost of construction exceeds €125 million, cable users will be responsible for making up the difference. "In the immediate future, and on the basis of the roadmap that has been drawn up, we will be in constant communication with both the Greek side and the European Commission for the further progress of the implementation of the project, as well as with parties that have already shown a real interest in participating in the project," Mr. Papanastasiou stressed. He noted that the decision of the Council of Ministers is the culmination of many consultations with all parties involved and the clarifications that have been given, so that the Republic of Cyprus has before it real data regarding the financial, technical and legal aspects of the project.  

OPEN ISSUES

However, there are still two key issues for the continuation of the project which remain open and for which no answers were given yesterday. The first concerns the formulation of the Weighted Average Average Acquisition Cost (WAAC) for the project. Reports wanted it to be locked at 8.3% for the first 17 years, instead of 12 as per the existing RAC decision; however, it was not confirmed at yesterday's briefing. The second issue relates to the final investment decision on the Republic of Cyprus' participation in the Great Sea Interconnector's share capital.  ITALY Speaking yesterday at the 7th Infrastructure-Transport Conference, ITC 2024, the President and CEO of IPTO, Manos Manousakis, announced that by the end of October the agreement between IPTO and the neighbouring operator Terna is expected to be finalised in order to start the tender procedures for the second Greece-Italy interconnection in 2025, which will triple the energy exchange margin between the two countries, from 500 MW today to 1 MW. 500 MW