Government declares Cyprus emerging market to maintain monopoly
THE ELECTRICITY Authority of Cyprus has said it is willing to enter a joint venture for an LNG deliquefaction facility – a move allowing it to remain a key player in the shift from power plants relying on heavy fuel oil.
As it stands now, the EAC has been offered a 39 per cent stake in a proposed Natural Gas Public Corporation (NGPC), which is to be majority-owned by the state.
The NGPC would be the sole importer and provider of natural gas on the island, selling the fuel to customers, primarily the EAC.
At the same time, the EAC wants a sizeable share in a land-based plant which would process the fuel and distribute it to consumers.
The semi-government organisation – which so far has had a monopoly on the generation and supply of energy – has received assurances from the government that Cyprus will be declared an emergent, or protected, market.
The European Commission is said to have given Cyprus the go-ahead for emergent status concerning LNG.
The NGPC will be in charge of closing deals with foreign countries for the supply of LNG, although as a major partner the EAC will also have a say in decision-making.
To make this happen, the Cabinet yesterday approved an amendment temporarily suspending the law that allowed for licences to be awarded to private LNG providers.
Declaring the market emergent immediately would block the entry of independent LNG providers, such as Golar and SBM.
Under a Cabinet decision taken in June, rendering the market emergent would have occurred after the introduction of natural gas, not before as the amendment now proposes.
The EAC had been fiercely opposed to deregulation, fearing that private corporations might take over the market with floating terminals, since at the moment Cyprus lacks any LNG infrastructure.
Worrying for the EAC’s future, employees had threatened to strike unless the government revised its policy.
Another bone of contention concerned the government’s prior intention to invite tenders for both a land-based plant and offshore unit; the government has now opted to launch two separate tenders.
The government had warned it would go ahead with its LNG plans with or without the EAC. Given that the EAC’s capital and know-how are invaluable to such an undertaking, this may have been a bluff, but the EAC decided not to call it.
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