THE ADMINISTRATION yesterday dismissed the notion that it took a licking from parliament, after the latter passed legislation barring the energy regulator of the right to issue private licenses for natural gas supplies.
The law suspended the ability of the Cyprus Energy Regulatory Authority to issue licensing for private companies to trade in LNG until an exclusive supplier is established on the island.
But the government fears the clause may violate the EU acquis by taking protectionism a step too far.
“We could be liable to fines if a third party were to take recourse to European courts,” said government spokesman Vasilis Palmas.
The President reserved the right to send the law back to the House, he added.
“We respect the decisions of the parliament. It is not a defeat for the government, as some say. But the Cabinet will examine the decision and make up its mind,” he said.
The legislation is the first step in declaring the Cypriot market “emerging”, a status which would allow the island to control supplies through the creation of a public utility company, or a preferred supplier.
Though it does not specify whether the supplier will be in private or state hands, it’s almost a foregone conclusion that the task will fall on a public utility, known as DEFA, which would be allowed to import and sell gas.
The government wanted the regulator to maintain its role in being able to issue, and to revoke licences, and declare the market emerging once the natural gas was available.
But the amendments submitted by AKEL and DISY strip the regulator from that right forthwith.
It is no secret that the modifications were thrashed out by the Electricity Authority of Cyprus, anxious to remain a key player in the energy industry.
The EAC will hold a 39 per cent stake in DEFA.
The supplier would be obliged to secure long-term supplies of natural gas, worth hundreds of millions of pounds; that’s on top of the cost of building a land-based facility to store and process the fuel.
Additionally, the law passed by the House effectively spells the end of the floating terminal option.
It refers to the “creation of a land-based terminal as the exclusive station for the import, storage and re-gasification of liquefied natural gas in the Republic.”
Consequently, whether or not the Cabinet goes along with this, the LNG project would by default be assigned to the public utility, given that private licenses have been banned for an interim period.
That means that applications by Golar and Vasilikos LNG have been shelved.
A pleased EAC chairman Charilaos Stavrakis did not share the government’s concerns, noting that the legislation paved the way to secure natural gas “as soon as possible and as cheaply as possible.”
But the ball was still in the government’s court, he said, as it was up to the Cabinet to decide how quickly they would get things moving.
Stavrakis also shot down rumours that the EAC had played political games of its own, colluding with the opposition to defeat the government’s original bill.
The EAC board comprised people of all party affiliations, he said.
Even the EAC unions seemed content with the outcome. Union rep Andreas Panorkos said parliament’s decision “protects the EAC, consumers and the economy.”
But he was also critical of the government’s handling, pointing out that the whole venture would have to start from scratch.
“We have spent £6 million already on foreign consultants. Now, we have to pay another £10-£15 million for experts who will advise us on the operation of a land-based plant.”
AKEL spokesman Andros Kyprianou said parliament had “rescued” the EAC, and urged the President not to send back the law.
And DIKO deputy Angelos Votsis said his party had “no choice” but to vote in favour, despite initially abstaining on the amendments.
The onus is now on the President, who must decide within 15 days whether to send back the law. If he does, and parliament turns it down—which is most likely—the President must then sign the legislation or refer to it to the Supreme Court, which will examine whether it is constitutional and/or in breach of the EU acquis.
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