Cyprus Carries Cable Cost Burden

A group of Democrats and Republicans in the US Congress has written to Secretary of State Marco Rubio and DFC chief Ben Black asking them to put the Great Sea Interconnector higher up Washington's list of priorities, a planned undersea electricity cable linking Greece, Cyprus and Israel (Schneider House, Protothema). It gave the project a useful diplomatic push. It did not bring a cheque, a loan guarantee, or permission to start building. From here to the day power flows through the cable, the argument is still about who pays.

The project is not short of powerful friends. Brussels has made it a priority cross-border project and put roughly €657 million in grants behind it (CINEA, EUR-Lex). French infrastructure investor Meridiam signed on 5 August for a 66% majority stake (Greek Prime Minister). Greece's grid operator ADMIE, which retains 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 formal approvals process before any final investment decision. The weakness is no longer political backing. It is the absence of a settled answer on what households and businesses will be charged.

Why the Cable Makes Economic Sense

Cyprus remains one of the last EU member states with no physical electricity link to another country's grid. That leaves the island to manage every outage, demand surge and supply shock on its own. It means higher backup costs, and it limits the amount of solar and wind power the system can comfortably take.

The cable would connect Cyprus first to Greece, and later to Israel. It is planned to carry 1,000 MW across roughly 1,200 km (ADMIE, OT). Cyprus could import cheaper electricity when local supply is under strain and export surplus renewable power when conditions allow. That becomes more valuable after 2029, when the island could lose a large share of its conventional generating capacity (Cyprus Mail).

The case for the cable is clear enough. The problem lies in the distance between a sound economic case and a built, paid-for piece of infrastructure.

The Bill Comes Before the Electricity

The most difficult fight is over cost recovery: who pays for construction, and how much of it appears on electricity bills. The Greece-Cyprus leg allocates costs 63% to Cyprus and 37% to Greece. Cypriot consumers therefore carry most of the regulated burden.

Cyprus's energy regulator, CERA, is not accepting ADMIE's numbers at face value. ADMIE says it has already spent €251 million. CERA has recognised only 32% of that as recoverable through network charges (Protothema, Politis). In plain terms, the regulator is refusing to let ADMIE shift most of its claimed spending onto customers. Nicosia says it will not make further payments beyond a €125 million intergovernmental agreement before the cable is actually operating (Capital.gr).

Private investors have a different concern: whether the return is secure. They have reportedly been offered an allowed return of 8.3%, plus a 3.7% premium, fixed for 17 years (Kathimerini, Les Echos). Those returns would ultimately come from the same network charges paid by electricity users. Lower bills are possible only if regulators allow enough cost recovery to finance the asset while still leaving room for cheaper imported power to reach customers.

The financing is not fully pinned down either. Cyprus Energy Minister Michael Damianos described Meridiam's arrival as a vote of confidence, but said any Cypriot state equity participation will wait for the European Investment Bank's due-diligence study (Marine Cyprus, Sigmalive). Days after Meridiam signed, the acquisition price, equity commitment and rules for cost overruns remain unpublished. Opposition parties AKEL and DISY have demanded disclosure before Cyprus accepts further obligations (PafosNet, Philenews). The deal has not been formally notified to the European Commission for merger review (CNA).

Then comes the practical question of readiness. Nexans has a cable contract reportedly worth about €1.43 billion plus VAT, with €251.4 million already paid and 160 km of cable produced by the end of 2024, but still no full notice to proceed (Capital.gr). Seabed surveys have not restarted, and reports of a maritime notice authorising survey work remain unconfirmed (Cyprus Mail). The European Court of Auditors has warned that cross-border electricity projects regularly run late (European Court of Auditors). The immediate risk is that consumers begin paying network charges for construction before the cable delivers cheaper or more secure electricity.

The US congressional letter points to the DFC, America's development finance agency, but there is still no disclosed DFC board decision, term sheet or due-diligence process (Schneider House). The endorsement matters. It is not financing.

Who Gains, Who Loses

If the cable works, Cypriot electricity users get better security of supply and the option of imports when local power is expensive or scarce. Greece becomes the EU bridge for Eastern Mediterranean electricity flows. Meridiam and its investors get a regulated infrastructure asset with guaranteed returns for almost two decades.

The coalition behind the Great Sea Interconnector is now wider than at any previous point: Athens, Nicosia, Brussels, Paris, Washington, ADMIE, Meridiam and Nexans. The decisive players are the regulators. They will determine whether this becomes infrastructure that cuts Cyprus's isolation, or another European energy project where the bill arrives long before the benefit.