Energy Minister stresses geostrategic importance of EuroAsia Interconnector

Cypriot Minister of Energy, Commerce, and Industry, George Papanastasiou has stressed the geostrategic importance that the EuroAsia Interconnector project has for the Republic of Cyprus.

He also pointed out the "serious interest" from neighbouring countries beyond Israel, such as Jordan and potentially Saudi Arabia, in this major undertaking.

"The Republic of Cyprus, in addition to the benefits it will gain itself, can also become a geopolitical hub," a goal that has been pursued for years now, the Minister stressed during a session of the Parliamentary Energy Committee on 29 August.

Papanastasiou pointed out that the EU has decided that all member states should be electrically interconnected. He further mentioned that Cyprus, being a bit far, requires an investment of €1.57 billion, with recent increases pushing the amount to nearly €2 billion, to link up with the European electricity system.

He added that this €2 billion investment was estimated to cost the electricity consumers of Cyprus and Greece around 0.7 cents per Kilowatt hour, saying that it was not an important burden given the benefits.

The Minister of Energy said the Republic of Cyprus would assess the project's economic viability, as evaluated by the European Investment Bank (EIB), and this assessment will be presented to the Ministry.

He revealed that the Ministry of Energy is in the process of awarding a specific entity specialised in conducting studies on "economic viability and geostrategic value," adding that countries in the Middle East also want to connect to the European network. "If we implement all of this strategically, Cyprus becomes a significant hub connecting the Middle East to the EU”, he said.

The Minister mentioned that Cyprus was involved in the project through the Recovery and Resilience Fund, having promised to the implementation entity €100 million, which would be a loan to the Republic of Cyprus and a subsidy to the project. He added that there is also a subsidy of €657 million from the European Commission. The subsidy is limited only to the Cyprus–Crete interconnection, he added.

Furthermore, the Minister of Finance, Makis Keravnos, stated that it was a project of a private entity pending for a decade. He added that the government's commitment to the project was also in relation to the position of the European Investment Bank.

"From public statements of EIB representatives, there are some opinions on the project, and a delegation from the European Investment Bank is expected in Cyprus next month for a detailed briefing," he added.

He mentioned that the government is carefully examining the matter, "because we cannot get involved in such a large cost without a thorough technical and economic evaluation of the project." He noted the need for "absolute assurance of the cost of electricity and absolute assurance of carbon dioxide emissions."

The CEO of the Implementation Entity of the electric interconnection, Nassos Ktorides, characterised the EuroAsia Interconnector, with a capacity of 2,000 MWh, as a "top project of common EU interest" connecting the electricity grids of Israel, Cyprus, and Greece (via Crete) to Europe through underwater continuous-voltage cables.

"With the project's implementation, we envision the end of Cyprus' energy isolation" and "the security of energy supply" for the three countries, he said.

Ktorides added that the project "significantly reduces the price of electricity for residential and business consumers, while also reducing carbon dioxide emissions, increasing the penetration of renewables”.

He mentioned that the project was approved by the European Parliament and the member states in 2013 as a project of common interest and was positively re-evaluated in 2015, 2017, 2019, and 2021.

"The last approval for the inclusion of the project in projects of common interest was granted on 9 May, 2023," he added.

Ktorides said that the shareholders of EuroAsia Interconnector, which is a Cypriot private law company, will also have the participation of the Transmission System Operator of Greece by 25%, as part of the share capital increase, while the remaining percentage of the capital increase will be covered by existing and new shareholders.

He also said that all expenses from 2011 to today have been covered by the Implementation Entity's own resources and those of its shareholders, as well as EU grants for conducting part of the studies. He emphasised that there has been "no burden on the Republic of Cyprus and Cypriot taxpayers."

Additionally, Ktorides said that "the implementation of the electric interconnection offers significant social and economic benefits and substantial economic benefit to the Cypriot consumer of around €200 million annually," equivalent to a 20% reduction in the electricity bill each month.

(Source: CNA)