Accra:Cyprus plans to initiate a payment of £25 million towards the Great Sea Interconnector (GSI) electricity link in the coming weeks, pending the anticipated issuance of a NAVTEX by the Greek Government before October's end, according to Energy Minister Michalis Damianos.
According to Cyprus News Agency, this payment will be drawn from the state budget, with Cyprus committed to contributing £25 million annually over five years, up to a total of £125 million, contingent on project progress. The 2025 payment was deferred due to inactivity that year, as explained by Damianos to the House Finance Committee during the presentation of his ministry's 2027 budget.
The GSI aims to connect the electricity grids of Cyprus and Greece, addressing Cyprus's energy isolation. Progress has faced challenges due to geopolitical tensions and financial uncertainties. The Cyprus Energy Regulatory Authority has acknowledged £82 million of the £302 million claimed by project implementer ADMIE. The project is linked to £650 million in European funding, and a study by the European Investment Bank is ongoing. Additional financing might be sought from EU funds, investors, or the EIB, with the possibility of state participation in the project's share capital being considered post-study.
Damianos highlighted the complexity of potential legal issues should the project fail due to geopolitical risks, requiring expert legal advice. Consumers will start repaying through electricity bills only after project completion and initiation of electricity transfers to Cyprus, spread over 30 years.
The minister noted potential reactions from Turkey, as seen in 2020 and 2025, and acknowledged Cyprus's lack of protective equipment for vessels in its exclusive economic zone. Greece, the French Government, and related French interests are involved in addressing these challenges, with Nicosia receiving updates from Athens. If the project advances, completion is expected by the end of 2031.
Damianos emphasized the importance of completing the liquefied natural gas (LNG) terminal at Vasilikos, aiming to secure natural gas before 2030, when existing electricity generating units are to be retired. Eight bidders are engaged in the terminal's completion process, with an award anticipated by the end of 2027. If natural gas procurement fails, Cyprus will continue using costlier heavy fuel oil.
The government is also progressing with energy storage plans, including 120 megawatts of capacity from the Transmission System Operator by January and an additional 80 MW by the Electricity Authority by the end of 2028. A £20 million subsidy scheme for industrial batteries is also underway.
Regarding offshore gas, Damianos mentioned the Aphrodite field consortium's request for favorable financial term changes, currently under review. Plans are in place to export gas from Aphrodite and the Kronos field to Egypt, with longer-term options for domestic use from smaller fields also being considered, although not feasible at present.
The Energy Ministry's 2027 budget is set at £83.8 million, a reduction from £145.4 million in 2026, primarily due to the absence of Recovery and Resilience Facility funding included in the current year's development spending.