Dependency on oil EAC’s biggest expense

By George Psyllides

Dependence on oil was the electricity company’s (EAC) biggest problem, its chairman said on Tuesday, accounting for around 66 per cent of its expenditure in 2014.

Even as the EAC’s fuel bill fell by 7.9 per cent last year as a result of the drop in the international price of oil, some €478mln or 66.8 per cent of total expenditure was spent on fuel.

“This percentage shows that dependence on oil is the EAC’s biggest problem,” Othonas Theodoulou said during the presentation of the organisation’s annual report.

Revenue from sales of electricity fell by €75.8mln, or 9.5 per cent, mainly due to the reduction in fuel costs and the imposition of a permanent reduction of 8 per cent on basic tariffs by the energy regulator.

Net profit for the year fell by 42.5 per cent, from €73mln to €42mln.

Theodoulou urged the state to give the board more time to complete and implement the ongoing restructuring programme, which entails accounting and operational separation.

“When this Board of Directors took up its duties in 2013, the EAC was not in good shape,” Theodoulou said “…the external auditors had refused to sign off on the organisation’s accounts. Despite the problems and adventures that it has experienced in recent years, the EAC is today a robust organisation, capable of carrying out the investment and infrastructure changes that the state deems necessary for modernising the country’s electricity system, with the aim of benefiting consumers and helping industry and tourism so that the upturn in the Cyprus economy may continue.”

Theodoulou said the charge per kilowatt-hour (kwh) has dropped 28 per cent since 2013, partly due to the reduction in international oil prices but also “to the optimum management of the EAC’s activities and operations, resulting in a considerable improvement from our ranking as imposing the second highest charge per kilowatt-hour in Europe to being close to the EU 28 average.”

The average price per Kwh for households in the EU was 0.208 in 2014 compared with Cyprus’ 0.236.

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