Kyriacos Kakouris: The EIB is looking forward to seeing new project ideas flourish in Cyprus

In October last year, Kyriacos Kakouris became the European Investment Bank’s (EIB) first ever Cypriot Vice President. Here, he tells GOLD about the EIB’s role as a Climate Leader and its work in Cyprus.

Among other things, Kakouris talks about how a €369m loan approved by the EIB Board is financing of part of the National Contribution of the THALIA programme and the EIB's potential involvement in the Great Sea Interconnector, while also exploring the areas covered by the EIB’s mandate in which Cyprus currently remains underfunded in.

Tell us about your personal journey within the EIB.

In November 2003, I was on the EIB Board as an observer and I became a full member in May 2004, after being nominated by the then Minister of Finance, Markos Kyprianou. This was renewed by subsequent ministers for almost 20 years until September 2023. Prior to joining the Board and during my time at the Ministry of Finance in Cyprus, I cooperated with the EIB and its staff on various investment projects and I valued what the Bank had to offer my country. As a Board member, I felt that we all had a mission – to contribute to the growth of Europe and the rest of the world – and that this could only be achieved with leadership, vision and collaboration with the staff and the management of the Bank. Today, I am one of the nine members of the Management Committee. Together with the President and the seven other Vice Presidents, we are the bank’s collegiate executive body. It is the first time that a VP comes from a small country like ours and I am very proud of this but, at the same time, I do feel a certain responsibility to make sure that small EU states have equal participation in the governance of the Bank, as well as access to EIB financing.

The EIB’s European Investment Fund and the Government of Cyprus recently collaborated with a fund manager to establish and manage the Cyprus Equity Fund that will focus on providing funding to small enterprises and startups. How will you define the success or failure of this collaboration?

The European Investment Fund celebrates 30 years of operations this year, including its longstanding presence in the European venture capital and private equity markets. Deploying developmental mandates, such as the Cyprus Equity Fund, in nascent ecosystems of underserved EU markets and regions is core to its policy goals in supporting Cohesion and Competitiveness across the EU. For all equity operations, measuring success with quantitative criteria is still valid – at the end of the day, the fund still needs to ensure returns for its investors – but that is most definitely not enough. For developmental mandates, qualitative criteria inevitably also come into play, so we are looking forward to seeing new project ideas flourish, research projects reach commercialisation, startups develop into global endeavours and ultimately a strong, developing ecosystem emerge, as we have seen in a number of other countries where similar initiatives were deployed.

Cyprus has also secured a €369 million loan from the EIB to support smart, digital and sustainable investments in the country. Can you give us some examples of sectors/sub-sectors which are ripe for investment here, can benefit from this funding, and will help improve the country?

The €369m loan approved by the EIB Board is for the financing of part of the National Contribution of the THALIA programme. Some good examples of sectors that can benefit from this are infrastructure, where in the past we have implemented projects like flood-protection and drought-protection works, and key urban regeneration projects. The upgrading of public buildings to make them more energy-efficient is also vital, as well as continuing to ensure we create more green spaces in our urban areas. We must also focus on Education, especially programmes geared towards fostering entrepreneurship among the younger population and also middle-aged individuals who are unemployed or looking to boost their incomes through starting a business. Finally, Transport and Energy are sectors that need and can benefit from investment. When it comes to the former, we must target investments that help upgrade public transport (bus stations, stops and carports), the transition to electric mobility (electric buses and charging points). And for energy, it is vital that, apart from making public places and buildings more energy-efficient, we also focus on renewables. We have to support investments that target the transformation of the electricity grid to support the transition to cleaner and greener energy, while also building more photovoltaic parks like the Apollon project on the University of Cyprus campus.

There has been talk of the EIB becoming involved in financing the Great Sea Interconnector (formerly the EuroAsia Interconnector). Is this a possibility?

We have been in discussions with both the previous promoter of the project as well as with the relevant authorities in Cyprus. We have carried out our own analysis, which concluded that there are alternative solutions – like battery storage – which could achieve the same technical results at a lower price. Of course, we also understand the political importance of an energy interconnection for Cyprus as it will integrate the last member state into the European power grid and we therefore remain in contact with the different stakeholders. We are following developments; in particular, the recent change in the promoter and the feasibility studies to be carried out by the Ministry of Energy and we stand ready, once this report is finalised, to discuss with the stakeholders any additional or new information and findings which may be relevant.

In 2019, the EIB Board of Directors approved a set of climate action and environmental sustainability targets for 2030. What is your assessment of their progress so far and what are the challenges and opportunities that lie ahead for these targets in the context of today’s fast-changing global geopolitical landscape?

The EIB Group is a climate leader and plays a pioneering role in the EU and globally. The green transition is vital to Europe’s economic competitiveness and an energy revolution is already in full swing. Europe must ride the wave and lead. In 2023, the EIB delivered more than €44 billion of green finance which represents around 60% of our total activities and is more than double the amount provided in 2019. We are on track to achieving the main goals set out in our 2020 Climate Bank Roadmap (CBR), further transforming the EIB into the EU climate bank. With €349 billion of green investment supported since 2021, the EIB Group is on track to achieve its goal of €1 trillion of green financing supported by the end of the decade. To achieve global climate goals and energy security, we will need massive new investments in energy efficiency, renewables, electricity networks and innovative technologies (floating offshore wind, battery storage, low carbon hydrogen). We have upped our game accordingly. Over the past decade, the EIB has channelled around €108 billion into the European Union’s energy sector and additional finance for clean energy projects around the world. These investments are now helping Europe weather the crisis triggered by the abrupt cut in Russian gas supplies.

In which areas covered by the EIB’s mandate is Cyprus currently underfunded?

I will refer to five such areas:

(1) The transition to green energy: On the emissions side, more than 80% of Cyprus’ electricity is still produced from the combustion of liquid fossil fuels, making electricity in Cyprus both expensive (among the highest in Europe) and harmful to the environment, so there is plenty of scope for more to be done. The EIB stands ready to assist the country in the decarbonisation of its energy system. We understand the main challenges faced in increasing the production of renewable energy and in particular, (i) the outdated grid (ii) the need for additional renewables and (iii) the lack of storage. We recently carried out a mission together with our energy experts and we met with several stakeholders discussing investments that can help resolve the challenges faced by the green transition, and hope to continue these conversations. I should add that, with regard to the electricity grid, it is highly urgent that it be upgraded in order to fully utilise new investments in renewables.

(2) Energy efficiency: We would also like to be more involved in energy efficiency investments and stand ready to offer financial support, either through intermediary banks to support investments by households and small-sized enterprises or directly for buildings such as public buildings and schools. We also stand ready to offer technical advisory services if and where these are needed.

(3) Wastewater and anti-flooding: We may have just signed some €100m loans in 2023, but the investment needs are significantly higher and we are here to continue supporting such climate adaptation investments.

(4) Education: We are in discussions with several universities to support their growth as well as student housing.

(5) Research & Development: We are in discussions with the centres of excellence to support research and development in the country.

(Photo by TASPHO)

(This interview first appeared in the March edition of GOLD magazine. Click here to view it.)