Doubts mount over Great Sea Interconnector's true cost and electricity price impact
"Cyprus Finance Minister Makis Keravnos has warned that the Great Sea Interconnector’s final bill will significantly exceed the initial €1.9 billion subsea cable estimate once insurance, maintenance, and operational costs are included, casting serious doubt on whether the project will reduce retail electricity rates. With Cyprus obligated to fund 63% of capital expenditures under its cost-sharing pact with Greece, the government is withholding state equity participation pending updated due diligence, amid escalating parliamentary alarm over potential consumer surcharges and non-Cypriot control of the asset."
EU Directive 2019/790 Article 15 Attribution • Verified Energy Document
The Great Sea Interconnector (GSI) project faces escalating cost concerns, with Finance Minister Makis Keravnos revealing on Tuesday that its final price tag could significantly exceed the initially advertised €1.9 billion. The minister also cast doubt on whether the interconnector would ultimately deliver lower electricity costs for consumers.
Addressing members of parliament, Keravnos clarified that the widely cited €1.9 billion figure pertains solely to the subsea cable. He emphasized that additional substantial expenditures, including insurance coverage, warehousing, and maintenance, must be factored into the project’s comprehensive cost.
The minister stated that the government cannot commit to becoming an equity investor in the GSI without current financial data and a clear assessment of the project's viability. Such a significant investment would inevitably impact public finances and the expenditure margins mandated by European Union regulations. Should the state opt against investment, the financial burden would directly fall upon Cypriot consumers.
Keravnos referenced a 2017 estimate from Cyprus’ energy regulator, which projected that the operational GSI would add 3.7 cents per kilowatt-hour to consumer costs. He directly questioned the project's ability to reduce energy prices, telling MPs, "we're not sure that the price of energy would come down."
He further recalled a "discouraging" feasibility study conducted in late 2024 by the American firm Curtis, Mallet-Prevost, Colt & Mosle LLP. This study, commissioned by the government, highlighted significant financial risks and inadequate profitability. Consequently, the government requested an updated study, the findings of which are still pending. The European Investment Bank had also previously voiced viability concerns, suggesting in July 2023 that Cyprus consider energy storage as an alternative.
In February 2024, the cabinet acknowledged the GSI's geopolitical importance but set strict preconditions: a comprehensive due diligence report, updated cost estimates, and a robust business plan. Keravnos noted that while ending Cyprus' energy isolation is crucial, EU finance ministers have discussed that electrical interconnectors are not a universal solution to the current global energy crisis.
Both Minister Keravnos and Energy Minister Michalis Damianos dismissed suggestions of governmental dissent regarding the project, affirming that it cannot proceed irrespective of cost. Damianos indicated that if costs prove excessive, the government would seek additional investors and alternative financing mechanisms. He characterized the GSI primarily as a project for energy adequacy and security, rather than a direct measure to reduce electricity prices. Nevertheless, Damianos stressed the government’s responsibility to ensure the project’s technical excellence, economic viability, and ultimate benefit to consumers.
The recent involvement of French infrastructure conglomerate Meridiam offers momentum, but Damianos reiterated the need for further investment. He also underscored the significant geopolitical importance of the GSI for Cyprus, Greece, and Israel. Regarding ongoing work, Greek authorities are expected to issue a Navtex for additional depth surveys in the coming weeks, with the French research vessel having the political backing of the French government.
Officials from the Cyprus Energy Regulatory Authority (Cera) pointed out that under the cross-border cost allocation agreement with Greece, Cyprus is responsible for 63 percent of the GSI’s capital expenditure (capex), with Greece covering 37 percent. Operating costs are split 50-50. Cera officials disclosed that on August 28, they formally requested information from Greece’s independent power transmission operator (Admie), the project promoter, regarding the project’s status after Meridiam's entry.
Cera vice-chairman Alkis Philippou expressed lingering questions concerning the GSI's ownership and control, highlighting that the cable's management currently rests "100 per cent in non-Cypriot hands." Sources close to the matter informed the Cyprus Mail that Admie should have proactively briefed the energy regulator about these developments, rather than waiting for inquiries from the Cypriot side. These sources further suggested that Admie’s website offers clues to the GSI’s likely true cost, citing a 300km interconnector priced at approximately €2 billion, while the Crete-to-Cyprus leg of the GSI spans 900km.
The ministers' remarks ignited a strong reaction from political parties in parliament. Akel, in a written statement following a House energy committee session, expressed increasing alarm and anger with each discussion of the GSI. The party demanded clear answers on two fundamental questions: "What will it cost Cyprus, and what will Cypriot consumers end up paying?" Akel provocatively questioned whether the project's purpose was to enrich certain individuals or serve geostrategic interests, at the expense of Cypriot consumers paying for even higher electricity. Akel also stated that government ministers failed to answer the crucial question of whether the project would proceed and who would ultimately control and manage the GSI, framing it as a matter concerning not only energy but also the security and sovereignty of the country.