Cyprus seeks to set up a state-owned company which will have the technical expertise to participate in a special purpose vehicle for the financing of the €2-billion electricity interconnection liking Cyprus and Greece called Great Sea Interconnector (GSI), Minister of Energy George Papanastasiou told CNA.

Papanastasiou proposed to the Electricity Authority of Cyprus the creation of a separate state-owned company which will assume the management of the transmission network and will participate in the Great Sea Interconnector, an SPV created by the project promoter, the Greek Independent Transmission Operator. The government has taken a decision in principle to enter the project with a €100 million equity investment. The final investment decision will be taken following a due diligence check and a cost-benefit analysis carried out by the European Investment Bank.

“The state believes that such a project, when the due diligence audit is carried out, needs an organisation which technical expertise so that mistakes of the past will not be repeated,” Papanastasiou said asked by CNA on the rational of the proposal.

Currently the electricity network belongs to EAC and is managed by the Transmission Operator which operates independently. The EAC operates an organisation with vertically separated operations.

On his part, George Petrou, President of the EAC Board of Directors said the board will convene on 15:30 today to examine the proposal.

“Surely we will not take a decision today, we need to study the proposal and to examine whether other solutions exist,” he said, noting that the issue will also be discussed with the EAC’s legal advisers on the issue of separation of operations.

He also said that he will also discuss the proposal with the EAC management and the trade unions before a final decision will be taken on the matter.

Sources told CNA that the government already has the alternative of the Cyprus Hydrocarbon Company (EYK) a state-owned company which could assume the role after a minor change in its corporate charter. A state-owned company leveraging on technocrats of EAC could assume the role to participate in the GSI interconnector while promoting the development of smart electricity grid, that would facilitate an increase of renewable energy in Cyprus' energy mix.

It is recalled that the EU Third Energy Package provides for the separation of energy supply and generation from the operation of transmission networks.