Cyprus Tightens Purse Strings on Interconnector Amid Delays and Geopolitical Tensions
"Cyprus has conditioned its financial backing for the Great Sea Interconnector on verified construction progress, postponing its pledged €25 million annual payment to Greek grid operator Admie. Energy Minister Michael Damianos cited stalled development and an unverified €220 million spending gap flagged by regulator CERA, while emphasizing that consumers will not fund the €1.9 billion project until electricity actually reaches the island."
EU Directive 2019/790 Article 15 Attribution • Verified Energy Document
Energy Minister Michael Damianos declared on Monday that the Cyprus government's financial commitment to the Great Sea Interconnector project is strictly conditional on its construction making tangible progress. He stated emphatically that "if electricity does not come to Cyprus, we will not pay."
Following his presentation of the ministry’s budget for the upcoming year to the House finance committee, Damianos confirmed that Greece's independent power transmission system operator (Admie) claims its expenses on the project have risen to €302 million. This figure represents an increase from the €250 million confirmed by his predecessor, George Papanastasiou, in August of last year.
However, Damianos highlighted a significant discrepancy, noting that the Cyprus energy regulatory authority (Cera) has only verified €82 million of these expenses, a figure that has remained unchanged for approximately 15 months. This means the Cypriot authority has not verified any new spending on the interconnector since August last year, despite Admie reporting an additional €52 million spent during that period.
The minister also addressed the €25 million annual payment pledged by the Cyprus government to Admie, set to run from 2025 until 2029, which was intended to ensure Admie's financial viability when it was the project's sole owner. Damianos announced that the first payment, originally due in 2025, has been "postponed" due to a lack of progress, stating, "no work progressed during that year." He further clarified that "the commitment concerns a project which is progressing and not a project which remains pending."
Damianos also assured that Cypriot consumers would only begin contributing to the project's cost after its completion and when Cyprus starts receiving energy via the interconnector cable from Greece. He added that the portion of costs attributable to Cypriot consumers is planned to be repaid over a 30-year period. Regarding potential increases in construction costs, Damianos suggested that "additional resources should be sought, possibly from investors, funds, or through financing from the European Investment Bank."
Describing the interconnector, which aims to link the energy grids of Cyprus, Greece, and Israel, as "important both for electricity adequacy and for geopolitical reasons," Damianos nonetheless acknowledged the "risks" associated with its construction. He anticipates that "Turkey will react" to the cable's planned route between Cyprus and Crete, as a segment is projected to pass through waters that Turkey claims as its own. He noted that while "the Republic of Cyprus does not have the equipment to protect ships operating in its exclusive economic zone," Greece, the French government, and French interests associated with the project have a crucial role in addressing this issue. Nicosia, he confirmed, is "fully informed by Athens about developments" and believes the project could be fully completed by 2031, should it advance.
These statements follow Greek government spokesman Pavlos Marinakis's insistence last Friday that the interconnector project would proceed "based on the initial planning," asserting that "any action which is contrary to international law will not hinder or change the initial planning of the project." His remarks relate to the ongoing maritime dispute between Greece and Turkey over the waters between Cyprus and Crete. Greece and Cyprus, citing the United Nations convention on the law of the sea (Unclos), maintain their rights to an exclusive economic zone (EEZ), while Turkey, which is not a signatory to Unclos, disputes these claims, contending that the sea between the islands is Turkish beyond 12 nautical miles of territorial waters.
Reports had previously suggested a potential compromise where the Greek and French governments, given France’s involvement through Meridiam and cable manufacturer Nexans, might "notify" Turkey of their intentions before issuing a navtex for planned seabed surveys. However, these reports remain unverified, and both the Greek and Turkish governments have not provided a response to inquiries on the matter. Despite this, Damianos had indicated last Thursday that the navtex for the seabed surveys would be issued before the end of this month, with the Greek coastguard confirming that the French-flagged research ship Abeille Marengo will be responsible for conducting the surveys.