Cyprus Faces 63% of Cable Costs

A bipartisan group of US lawmakers asked Secretary of State Marco Rubio and DFC chief Ben Black to prioritise the Great Sea Interconnector, a planned undersea electricity cable linking Greece, Cyprus and Israel (Schneider House, Protothema). Washington supplied momentum. It did not supply money, a loan guarantee or a construction permit. Every question between today and electricity flowing through the cable is about who pays, and none of those questions have been answered.

The project already has plenty of political friends. Brussels has labelled it a priority cross-border project and committed roughly €657 million in grants (CINEA, EUR-Lex). French infrastructure investor Meridiam signed for a 66% majority stake on 5 August (Greek Prime Minister). Greece's grid operator ADMIE, which keeps 34% and the technical lead, filed the Cyprus-Israel investment request with regulators on 13 August (ADMIE). As we reported last week, that filing started the clock on the approvals needed before any final investment decision. What the project lacks is not endorsement. It is a clear answer on what electricity consumers will be charged.

Why the Cable Makes Economic Sense

Cyprus is one of the last EU member states with no physical link to any neighbour's electricity grid. That isolation means the island has to solve every outage and demand spike on its own, keeping backup costs high and limiting how much solar and wind it can absorb. The cable would connect Cyprus to Greece first, then to Israel. Its planned capacity is 1,000 MW, over roughly 1,200 km (ADMIE, OT). Cyprus could import cheaper power when local supply is tight and export surplus renewables. The value becomes sharper after 2029, when the island could lose a significant share of its conventional generating capacity (Cyprus Mail).

The economic logic holds. The problem is everything between the logic and the delivery.

The Bill Comes Before the Electricity

The sharpest fight is over cost recovery: who pays for building the cable, and how much of the cost lands on electricity bills. The Greece-Cyprus leg splits costs 63% Cyprus, 37% Greece. That means Cypriot consumers carry most of the regulated burden. And Cyprus's energy regulator CERA is pushing back. Of the €251 million ADMIE claims it has already spent, CERA has recognised only 32% as recoverable through network charges (Protothema, Politis). Put simply, CERA is refusing to let ADMIE pass most of its claimed spending into bills. Nicosia says it will not make further payments beyond a €125 million intergovernmental deal before the cable actually operates (Capital.gr).

The private investors, meanwhile, have been promised a reported allowed return of 8.3% plus a 3.7% premium, locked in for 17 years (Kathimerini, Les Echos). Those returns are ultimately funded through the same network charges on electricity users. Lower bills are not automatic. They depend on whether regulators set cost recovery at a level that still leaves room for the import-price benefit to reach households.

The financing itself is not locked either. Cyprus Energy Minister Michael Damianos called Meridiam's entry a vote of confidence but said any state equity participation waits for the European Investment Bank's due-diligence study (Marine Cyprus, Sigmalive). Days after Meridiam signed, the acquisition price, equity commitment and cost-overrun allocation remain unpublished. Cypriot opposition parties AKEL and DISY demanded disclosure before Cyprus takes on more obligations (PafosNet, Philenews), and the deal has not been formally notified to the European Commission for merger review (CNA).

Construction readiness adds a separate risk. Nexans holds a cable contract reportedly worth around €1.43 billion plus VAT, with €251.4 million already paid and 160 km of cable produced by end-2024, but no full notice to proceed (Capital.gr). Seabed surveys have yet to restart; reports of a maritime notice authorising survey work remain unconfirmed (Cyprus Mail). The European Court of Auditors has warned that cross-border electricity projects routinely face delays (European Court of Auditors). The danger is specific: consumers may start paying network charges to cover construction costs before the cable produces cheaper or more secure electricity.

The US congressional letter addresses the DFC (America's development finance agency), but no DFC board action, term sheet or due-diligence process has been disclosed (Schneider House). The endorsement is real. The money is not.

Who Gains, Who Loses

If the cable works as designed, Cypriot electricity users gain supply security and import options. Greece becomes the EU-side bridge for Eastern Mediterranean power flows. Meridiam and its investors get a regulated infrastructure asset with guaranteed returns for nearly two decades. The coalition around the GSI is now the broadest it has ever been: Athens, Nicosia, Brussels, Paris, Washington, ADMIE, Meridiam, Nexans. The missing party is the one that decides whether this becomes infrastructure or a cost dispute: the regulators who must approve what consumers pay.