The final cost of the Cyprus-Greece power interconnection is expected to be much higher than the €1.9 billion currently estimated for capital expenditures (capex), Great Sea Interconnector (GSI), according to Finance Minister Makis Keravnos. The Minister emphasized before the Parliamentary Committee on Energy that the project’s financial viability and the final cost remain open questions.
Mr. Keravnos noted that the €1.9 billion primarily covers the cable, pointing out that there are significant additional construction works and other expenses, such as insurance coverage, warehouses, and maintenance needs, which must be reflected in the updated studies and are expected to significantly increase the project’s total cost.
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According to the Minister of Finance, the government cannot make a final decision without updated financial data and a clear picture of the investment’s viability. As he noted, the state must know the actual cost and how it will be financed, especially since the Republic potentially covering the costs would affect public finances and the spending margins set by the European framework for economic governance.
Conversely, if the cost is passed on to consumers, it will not directly burden public finances, but it will create a significant issue for consumers in a country where the cost of electricity remains high. An earlier 2017 estimate by the Cyprus Regulatory Authority for Energy (RAEK) put the cost to the consumer at approximately 3.7 cents per kilowatt-hour, depending on cable usage and the amortization of part of the cost through usage.
The Minister of Finance also referred to a feasibility study commissioned from an American company by decision of the Council of Ministers, noting that its findings were not encouraging regarding the project’s viability. For this reason, an updated study was requested, the results of which the government is awaiting before deciding on the next steps.
He added that the European Investment Bank (EIB) had previously expressed concerns about the project’s financial viability, and in July 2023 had recommended that the option of energy storage also be considered. In February 2024, the Council of Ministers recognized the geopolitical significance of the GSI, but set as conditions the completion of due diligence, updated cost estimates, and a business plan.
The Minister of Finance stated that Cyprus, as an EU member state, must interconnect with the other member states so as not to remain energy-isolated, noting, however, that the current energy crisis has sparked concern and discussions among EU finance ministers, and it was concluded that the electricity interconnections did not provide solutions to the current problems.
At the same time, he expressed reservations as to whether the interconnection would lead to a reduction in energy costs, pointing out that “we are not certain that energy prices will fall,” while, as he said, it is a particularly costly project.
There is no double talk within the government, the ministers said
Both the Minister of Finance and the Minister of Energy, Michalis Damianos, rejected the notion of “double standards” within the government, emphasizing that it cannot be said that the project will proceed regardless of cost. As Mr. Damianos noted, if the cost proves to be high, investors and other sources of financing will need to be found.
Mr. Damianos characterized the GSI as a project focused more on energy sufficiency and security than on reducing the cost of electricity. He noted, however, that the government has a responsibility to ensure technical excellence, financial viability, and benefits for consumers. The entry of the French company Meridiam, he said, gives new momentum to the project, but the participation of other investors is also required.
Regarding the Republic’s existing commitments, it was noted that the previous government had included the project in the Recovery and Resilience Plan with €100 million, on the condition that European funding for construction be secured. At the same time, a government decision has been in place since 2021 regarding Cyprus’s participation in the project, a fact which, as was pointed out, must be taken into account, while the extent to which previous commitments can be amended constitutes, according to the Minister of Energy, “a very complex legal question.”
At the same time, Mr. Damianos emphasized the project’s great geopolitical significance for Cyprus, Greece, Israel, and the wider region, noting that if costs deviate from estimates, the involvement of investors or other funding sources should be explored to cover them, so as not to place an unreasonable burden on Cypriot consumers. Regarding field surveys, he stated that a NAVTEX is expected to be issued by the Greek side in the coming weeks to allow for the continuation of hydrographic surveys, with the French government also providing support to the French research vessel.
CERA sent inquiries regarding the ADMIE-Meridiam agreement
CERA reported that the amount of €1.9 billion represents the current capex estimate, with 63% allocated to Cyprus and 37% to Greece, while the remaining expenses are split 50-50. RAEK has also raised questions regarding the final role of ADMIE and whether it will remain the implementing body after Meridiam’s entry.
RAEK President Polys Lemonaris stated that the Cyprus-Crete-Israel is an EU Project of Common Interest and that CERA has a regulatory obligation arising from European legislation. He noted that CERA was informed on August 11 about the ADMIE-Meridiam agreement and, on August 28, together with the RAEY, it sent a joint letter with questions, to which it has not yet received a response.
The issue of the cable’s ownership and control also remains unresolved. CERA Vice President Alkis Philippou stated that, based on current information, control and management of the cable will be 100% in non-Cypriot hands, raising the question of whether the Republic of Cyprus should have a stake in the project. RAEK member Neophytos Hatzigeorgiou estimated that the project is currently valued at close to €3 billion and that its completion is projected for after 2030.
Concerns and Anxieties of Members of Parliament
AKEL General Secretary Stefanos Stefanou expressed strong concern about the cost and viability of the Cyprus-Greece electricity interconnection–Greece, noting that the government has not provided clear answers regarding the final cost of the project or whether it will result in cheaper or more expensive electricity for Cypriot consumers.
At the same time, he criticized the government for its stance, arguing that it continues to make commitments without first conducting a comprehensive techno-economic assessment. He specifically referred to the agreement to pay €125 million over five years, as well as to the increase in the project’s estimated cost from €1.2 billion to €1.9 billion, noting that there are differing interpretations even regarding what this amount covers.
He also placed particular emphasis on the project’s ownership and governance structure, as well as on who will ultimately control the electricity market. He raised questions about the involvement of the French company Meridiam and the terms of its investment, arguing that the government is creating a certain impression through its communications without disclosing all the details.
He acknowledged that ending Cyprus’s energy isolation is an important goal, but stressed that a project of this scale cannot move forward without clarity on the economic and geopolitical terms. He also raised the issue of geopolitical risk, asking for clarification on whose interests the project serves and who would bear the cost in the event of problems or if the project fails to materialize.
A number of key questions surrounding the project remain unanswered, as stated by ELAM MP Linos Papagiannis. Mr. Papagiannis emphasized the political leadership’s obligation to convey to citizens the true picture of the country’s energy situation, noting that Cyprus remains the only energy-isolated country in Europe.
At the same time, he warned of the daily risk of widespread power outages, despite the current sufficiency of electricity, while expressing his deep concern over the lack of seriousness with which the volatile geopolitical situation in the southeastern Mediterranean is being addressed. The Member of Parliament publicly noted the authorities’ statement that the Republic’s necessary studies will be completed before January 2027, noting that his party will closely monitor the progress of the timeline in order to assess the project’s progress and submit its own proposals.
DIKO MP Adamos Aspris referred to the need to await the results of the economic feasibility and technical specifications studies for the power interconnection. Responding to the opposition’s calls for immediate decisions, Mr. Aspris noted that it is impossible for the government to take a definitive position on the implementation or the final cost of the project before the ongoing studies are completed.
At the same time, he highlighted the immense geopolitical significance of the interconnection not only for Cyprus but also for its strategic partners, such as the U.S., Israel, and the European Union. In this context, he proposed greater involvement by these international parties, both in the financial aspect and in sharing the geopolitical risk, believing that only in this way can a clear path be established for making definitive decisions in the public interest.
ALMA MP Irini Charalambidou spoke of the complete inability of the relevant ministers to provide clear and substantive answers regarding the status and agreement of the GSI. Ms. Charalambidou stated that no one can burden the Cypriot government with billions without ensuring a cost framework, while also expressing serious concern about whether the project will ultimately lead to lower electricity prices or if the costs will be passed on to consumers who are already burdened.
He recalled the “tainted past” of the case and the ongoing investigations by the European Public Prosecutor’s Office into the transfer of shares to ADMIE by EuroAsia Interconnector, while also supporting the Minister of Finance against the attacks he faced from certain circles in Greece, because, as he noted, the minister defended the interests of the Republic of Cyprus.
Here’s what MPs Nikos Georgiou and Andreas Pasiourtides had to say on the matter during the “Alpha News” program:
