Energy Minister: Government is evaluating EuroAsia Interconnector

The government is evaluating the Cyprus-Greece-Israel electrical interconnection project EuroAsia Interconnector, Energy Minister Giorgos Papanastasiou told reporters after a Cabinet meeting.

However, the minister failed to clarify if and how the government planned to finance the strategically important project, the cost of which has increased by 23% since it first started being discussed.

Papanastasiou reiterated that the government is considering three options, namely the provision of government guarantees, in order for the project to secure the remaining funding, the participation in the capital of the private implementing body, or no support.

Papanastasiou welcomed EuroAsia's announcement that it signed a €1.43b contract with Norwegian company Nexans to build the subsea cable that will connect Cyprus with Greece, saying it was a very important part of the infrastructure. As he pointed out, reaching this milestone was among the goals set by the European Commission to continue financing the project, amounting to €657m, which, he said, makes it one of the largest EU-funded projects of a member state.

Papanastasiou said that the second objective was the participation of the Greek Independent Power Transmission Operator, which signed a letter of intent for the participation and management of the cable and the transmission of electricity. The third objective, he added, that must be implemented immediately is the signing of an agreement for the construction of the voltage converter, which must be installed and be from a specific company because it must be in parallel operation with the networks of Europe which have the voltage converters from that company.

He said that the signing of the contract with Nexans is a very important development adding that while the project is considered private, nevertheless "the European Commission had Cyprus in mind when it offered the many millions".

Replying to questions, he said that the project was initially estimated to cost €1.57b; however, what with material prices going up, it has increased by 23% to €1.9b.

Due to its high cost, the project is currently being re-evaluated because it will require additional lending, said Papanastasiou.

It will be evaluated from three aspects: its viability, “that is, whether this project will bring advantages in terms of electricity costs to the end consumer”; its strategic importance; and its connection, “which is very important for us in Cyprus - with the neighbouring country of Israel".

The Minister said that while the project is of mutual benefit, since it connects two European countries, it actually connects Cyprus to Europe's network, which is a very important development since the EU goal is to connect all the member states of Europe with each other.

Asked when the government will make a decision, the Minister said: “We are "investigating the viability, we are in consultation with the European Investment Bank (EIB) and at this stage there is evaluation in order to move to the next stage which is its strategic importance."