THE SHOCKWAVES from yesterday’s catastrophic blast may have been felt several kilometres away, but the economic impact is going to reach much further, and for much longer, economists warned yesterday.
Even as the dust was settling, economists and authorities began to tally the cost of the government’s decision to store 98 containers of ammunition next to the island’s largest of three power stations.
As one economist put it: “It does not look good.”
The first cost will be that meeting the nation’s electricity needs pending the replacement of the €900 million Vassilikos power station, which produced more than half of Cyprus’ electricity needs, around 770 megawatts. The remaining two produce 680 megawatts together.
According to EAC spokesman Costas Gavrielides, a rebuild could exceed €1 billion.
And, as the cuts brought an eerie silence to Nicosia’s old town yesterday afternoon, it became clear that tourism and commerce would be hit hard.
Several Ledra Street shops emptied as tills stopped functioning, and an ice-cream shop closed its doors while they waited for refrigerated vans to arrive, to store their products. McDonalds and Starbucks, usually packed in the afternoons were empty and staff sat around waiting for the power to return. Much business was lost.
One generator retail firm even had to close its doors to a surge of customers because it had no electricity to power air-conditioning, or the tills to make the sales.
Alexader Demetriou and Sons executive director, Dave Demetriou said: “It was roasting in the shop so I sent everyone home… I had 10 to 15 people telling me they need generators, and other employees also received calls.”
The firm is now ordering in extra units — each costing €3,600 to meet the demand.
Asked how this could impact the economy, financial services consultant Stelios Platis said yesterday: “This is a major setback for the government’s financial planning and it will cut down on production.”
His own firm, MAP S Platis is another case in point: “Today we evacuated our staff from Limassol and moved to our office in Nicosia. Then we had a power cut and nobody could work… Inevitably work cannot proceed without electricity.”
AKEL MP and economist Pambos Papageorgiou said: “The effect depends on the direct cost from damage to the power station and surrounding villages, and how fast the electricity is restored. It will have a decelerating effect (on the economy)”
The hotel and tourism sectors are perhaps at most risk from the triple blow of intermittent electricity, reduced water and increasing electricity prices.
Papageorgiou believes the initial impact will be mitigated by advanced holiday bookings, and that it would have been worse if it had taken place in February or March.
“It is very dangerous to make an estimation now” he added.
Hoteliers association (PASYXE) director general, Zacharias Ioannides also believes that hotels can weather the initial storm, explaining that many hotels have their own generators.
Beyond the immediate energy costs there are an incalculable list of hidden costs and multiplier effects, ranging from clearance of the disaster site, lawsuits, the reconstruction of the naval base.
