28/08/24

Decisions regarding the electricity connection between Cyprus and Greece need to be taken sometime in the next few weeks, Energy Minister George Papanastasiou said.

Cyprus, he noted, is the only remaining EU member state not connected to the common electricity market.

The minister described the interconnector as one of the three ‘pillars’ of government policy to bring down electricity costs.

In Cyprus, the retail price of electricity is 33 cents per kilowatt-hour, compared to the EU average of 15 cents.

The second pillar is importing natural gas to generate electricity and the third pillar involves increase in the use of renewables.

Politis hosted a sponsored article that electricity prices in Cyprus can only be reduced with the electrical interconnection.

Politis reported that the arrests by the authorities of the Republic of Cyprus of people involved in cases of usurpation of Greek Cypriot land in the occupied territories were discussed in a meeting held by “prime minister” Unal Ustel in the occupied North.

The meeting was attended by the “Deputy Prime Minister”, the “Minister of Tourism and Environment” , the “Minister of Interior” Dursun Oguz, the president of the Turkish Association of Construction Contractors as well as some  investors, lawyers and bureaucrats.

At the meeting, where the legal and economic dimensions of the arrests were discussed in detail, the participants assessed the possible effects of these measures of the Republic of Cyprus on the Turkish Cypriots.

The meeting also focused on countermeasures that the illegal regime could take against the steps taken by the Republic of Cyprus.

Philenews (Andreas Bimbishis) reported last Sunday that the recent measures by the Republic of Cyprus targeting usurpers of Greek Cypriot properties have triggered a domino effect across the economic and political landscape of the occupied territories. The Cyprus government’s actions have led to a significant exodus of foreign investors from the area, severely impacting the Turkish-Cypriot economy, which had heavily relied on the illegal exploitation of these properties.

The statistics published in the Turkish Cypriot media demonstrate the extent of the damage received by the construction sector in the occupied territories.

A publication by Jeni Bakis (last July) stated that according to market data, in June 2024 there was a 1.21% increase in the number of houses and villas and a 4.91% increase in the number of apartments for sale in comparison with May 2024.

A publication in Turkiye newspaper earlier this month (August 7, 2024) was highly revealing regarding the movements of the Israelis in the occupied territories. “The Israelis who acquired thousands of acres of land in the “northern part” of the island through “false documents” and “companies” are in a state of panic due to the “amendment” in the “legislation” regarding the acquisition and rental of real estate by foreign nationals.

The amendment of the “legislation” led the Israelis who acquired land with hundreds of “shell companies” to look for ways to solve the problem which has arisen.

At the same time, it should be noted that, according to information, the Israeli owners of “shell companies” and land in the occupied territories, had meetings with lawyers, financial advisors and “notaries” and that, their proposal is the transfer of the land they own to Turkish Cypriots in exchange for a certain amount of money. It is even added that, as it became known, the Israelis who wanted commercial securities in exchange for the transfer, put the plots of land they own up for sale at auctions at humiliating prices.

Media reported that the police force is seeking to purchase two additional water cannon vehicles for rapid response to incidents.

Their estimated value is around €1,010,000.

The police force has currently one single such vehicle.

(My note: I have been informed that this was produced by Beit Alfa Technologies Israel that will also submit an offer for the 2 new vehicles)

Cyprus witnessed an improvement in its economic sentiment in August 2024, according to the University of Cyprus’ Economics Research Centre (CypERC).

The Cyprus’ Economic Sentiment Indicator (ESI) rose by 1.5 points compared to July 2024, driven by stronger business confidence in the services, construction, and manufacturing sectors.

26/08/24

Sigmalive reported that due to the worsening situation in the region, Wizz Air temporarily suspended flights to and from Israel on 25 August.

ECONOMIC NEWS

Politis reported that if the Great Sea Interconnector project does not proceed, Cyprus has a lot to lose, that includes:

• Remain energetically isolated from Europe
• Lose the unique opportunity to become an energy hub in the SE Mediterranean
• Lose the possibility to have a say and a role in the energy events of the region
• Lose the EU grant of 657 million euros and perhaps the 100 million euros approved by the EU from the Recovery and Development Fund
• Continue to have the highest electricity prices in Europe
• Consumers will lose the savings in electricity bills which amounts to approximately 300-400 euros per year for each household
• Continue to pay millions of euros to the European Union for emission rights
• Energy producers, mainly RES, will not be able to dispose of the excess electricity production
• Turkey and the pseudo-state will promote their own electrical interconnection
• The EU will now look at Cyprus with a different eye in approving new funds for serious and large development projects
• Large foreign companies will be very reluctant to undertake development projects in Cyprus, since they will know that all projects are failing

The Cyprus Mail reported that the Electricity Authority and private energy producers have been exchanging accusations recently on who’s responsible for the high electricity prices. While criticism of the EAC is valid, private companies are raking in profits at the expense of the consumer. Energy analyst Charles Ellinas stated that “there are problems on both sides. The EAC has not moved with the times, and the private providers are making untaxed super profits at the expense of the consumer. As a result, Cyprus’ electricity prices are some of the highest in Europe.”

Tour operator Tui denied reports that it had struck a deal with the Republic of Cyprus to stop providing day trips for its holidaymakers in Cyprus to the occupied  north.

In a statement to the Cyprus Mail, Tui confirmed that the reported email sent by the company’s operations team manager in Cyprus to its local partners indicating that it would no longer promote or sell excursions to the north was authentic, but that it “does not reflect” the company’s position on the matter”.

“As a truly global company, Tui is always advocating for exchange and collaboration as the base for mutual understanding and peaceful coexistence” the company noted.

Philenews (Andreas Bimbishis) reported that the recent measures by the Republic of Cyprus targeting usurpers of Greek Cypriot properties have triggered a domino effect across the economic and political landscape of the occupied territories. The Cyprus government’s actions have led to a significant exodus of foreign investors from the area, severely impacting the Turkish-Cypriot economy, which had heavily relied on the illegal exploitation of these properties. The resulting decline in property values has fueled discontent among Turkish Cypriots, particularly against Ersin Tatar, due to his handling of the Cyprus issue.

These actions have also led to significant results, including the arrest and indictment of foreign businesspeople involved in the occupied territories.  He also notes that the recent departure of the Israeli company Trust Group, led by British investor David Lewis, which had developed the Karpaz Gate Marina, highlights the trend. The company’s exit was triggered by the arrest of Israeli investor Simon Aykut and the negative climate towards Israelis in the occupied areas. Lisa Singer, the marina’s manager, eventually agreed to the company’s exit due to the risk of her own arrest during frequent travels to Cyprus.

The occupied north’s ‘transport minister’ Erhan Arikli suggested that Greek Cypriots who use Turkish Cypriot-owned property vacated between 1963 and 1974 be arrested should they visit the north, as a response to the recent arrests of people in the Republic who stand accused of illegally using Greek Cypriot property in the north. The occupied north’s ‘Prime Minister’ Unal Ustel also said the necessary work to give a “permission” to repair and operate the hotels that a Turkish Cypriot businessman bought in the closed Varosha area, has begun. 

The government has extended the contract for the Cyprus-Greece maritime passenger connection for an additional three years.

The decision was made based on the successful performance of the service, which has transported over 21,000 passengers and 7,000 cars since its launch in 2022.

The Deputy Ministry of Shipping said the connection has been particularly popular with travellers who face difficulties in travelling by air.

The government is maintaining its fiscal forecasts for 2024 despite improved economic performance in the first half of the year, citing upcoming public sector wage increases and supplementary budget allocations.

It projects a general government surplus of 2.9% of GDP for 2024, growth in the region of 3% and unemployment close to 5.8%.

The government is maintaining its 2.5% inflation forecast for the year and expects public debt to further reduce to 22.2 billion euros, or 70.5% of GDP.

Philenews reported that Cyprus’s e-justice system project appears to be on the brink of collapse, despite efforts to resolve persistent issues. The Deputy Minister of Innovation said that a six-month extension had been granted to salvage the project but despite the contractor’s assurances that all identified issues were addressed, preliminary checks have not yielded positive results.

Only about €1 million of the project’s €6 million budget has been disbursed. The project is funded through the EU Recovery and Resilience Facility.

The goal of e-justice was to become a system for automating all legal procedures.

INBnews reported that a draft bill has already been submitted for public consultation aimed at modernizing the legal framework regarding arbitration as a means of out-of-court dispute resolutions. It was prepared by the Ministry of Justice.

22/08/24

Media reported that EL AL has pledged to “lock in” ticket prices for its flights connecting Tel Aviv International Airport with Larnaca, Athens and Vienna.

This was announced after a meeting that its management had with the Israeli Minister of National Economy.

Specifically, the Tel Aviv-Larnaca return ticket will be set at a fixed price of USD 199.

Since the start of the war, a large number of foreign airlines have suspended or suspended until further notice their routes to and from the airports of Tel Aviv, Eilat and Haifa.

This development resulted in a dramatic increase in ticket prices for flights operated by EL AL, ARKIA and ISRAIR.

Philenews reported that on August 26, another teleconference is scheduled between the Energy Regulators of Cyprus & Greece, the implementor (ADMIE) and the Cyprus and Greek Ministries of Energy, under the auspices of the EU Directorate General for Energy, on the final content of the regulatory framework for electrical interconnection. According to information, it is quite possible that the Cyprus Energy Regulatory Authority (CERA) will not have taken its final decision by then.

Other information from the Greek side states that today there will be a teleconference between CERA and ADMIE.

With regard to the geopolitical risk and a possible intervention by Turkey to prevent the laying of the cable in the maritime area that it considers to fall within the zone of the Turkish-Libyan memorandum, according to information, in the absence of a political position by the Cypriot Government, CERA is not going to accept that electricity consumers take the risk and pay the cost even if the interconnection is not completed. And the Government is aware of this intention.

As far as the request for recovery of ADMIE’s expenses from 1/1/2025 is concerned, everything is fluid. But it not seem to be confirmed so far by the analysis made by CERA’s advisers, that if recovery of costs does not start  from January ’25 the project will not be viable.

INBnews reported that the Ministry of Energy proceeded with the re-announcement of the tender for evaluating the cost-benefit study submitted by ADMIE, rejecting the offer submitted by DNV AS (Dubai Branch).

According to information, the Ministry of Energy proceeded with this action, due to the fact that the only company that submitted an offer during the first announcement did not respond to some clarification questions.

Cyprus is not collaborating with any travel organiser offering accommodation in the occupied areas, Deputy Minister of Tourism Kostas Koumis said.

He also stressed that no tourist packages promoting the occupied areas, where unfair competition prevails, are being encouraged.

Commenting on the reactions in the occupied north following the decision of the German organisation TUI to discontinue daily excursions to the occupied areas, Koumis clarified that there was no violation of the Green Line Regulation.

He added that every European citizen is entitled to travel to the occupied areas, and citizens of third countries can do the same under certain conditions.

Koumis expressed satisfaction with the 3.1% increase in tourist arrivals in Cyprus from January to July, despite developments in the wider region and the challenging economic situation in Europe.

Politis reported that according to Yeni Bakis, the pseudo-state is preparing reprisals for the ban on one-day trips to the occupied territories. The Turkish Cypriot leader, Ersin Tatar, is studying the possibility of opening tourist accommodation and hotels in Varosha.

Specifically, establishments whose legal owners have been compensated through the “immovable property commission”, that will be renovated. It also reported that people in the tourism industry consider the government’s demand to ask TUI to cancel its practice of organized day trips to the occupied territories completely unfounded and it will offer nothing. These day trips will continue.

A state-of-the-art cable station and offshore submerging infrastructure will be built in Cyprus to enhance digital connectivity in the eastern Mediterranean.

It is a strategic cooperation between Grid Telecom (company belonging to ADMIE that is the promoter of the electricity Interconnector) and Tamares Telecom.

The open-access connectivity hub will connect Cyprus in the west with Greece and southeastern Europe and in the east with Israel, Egypt and the Arab peninsula, securing alternative and reliable international data traffic routes for wholesale and corporate clients.

Philenews reported Legislation to impose a minimum tax rate of 15% on large multinational enterprises with an annual turnover of €750 million is ready for implementation and approval.

This harmonisation bill transposes the European directive, which Cyprus was required to implement by the beginning

of this year. In fact, due to delays, the European Commission previously sent a reasoned opinion to Cyprus, calling for the directive to be transposed into its national law.

Essentially, the directive puts an end to tax practices that allow multinational companies to shift their profits to jurisdictions with zero or very low tax rates.

Philenews reported that Turkish Cypriot leader Ersin Tatar had a meeting in Turkey with businessmen trying to convince them to come to the occupied territories for investments.

21/08/24

According to Diko MP Christos Orphanides and contrary to the government’s optimistic projections, troubles are far from over for the Larnaca marina and port project, with looming court proceedings by Kition Ocean Holdings on the horizon, as well as several other serious loose ends.

He accused the state and Transport Minister of persisting in “painting a rosy picture” when this was far from true.

The prospect of Kition pursuing its loss of revenue as well as capital claims in the courts is very real and this alone could set the project back at least five or six years, the MP claimed.

The MP also cast doubt over the fact that investors were seriously interested in the project accusing officials of offering false hopes.

He also raised the matter of residential and hotel units to be built adjacent to the marina.

The MP said no one would invest in properties near a port where tons of dust are released from cargoes of gypsum and animal fodder [the port’s main cargo].

The Minister of Transport denied accusations of holding off on making the Kition contract available and made made things ‘look rosy”.

A 25-year-old Israeli national charged with misappropriation of properties in the occupied north will remain free until his first appearance in the Nicosia Criminal Court on 8 October 2024.

His defence lawyer argued that her client has strong ties to the Republic, citing his two-year residency and marriage to a Cypriot national. She noted that the defendant had applied for a residence permit on compassionate grounds, with a decision expected on 4 November.

Philenews reported that Larnaca continues to attract Israeli tourists in large numbers this month, defying earlier fears of mass cancellations due to escalating Middle East tensions.

Marios Polyviou, President of the Larnaca Hoteliers Association (PASYXE) said there have not been significant cancellations from Israel or Europe, despite Cyprus being portrayed as a potentially dangerous destination at some point.

An Italian research vessel conducting surveys for the Interconnector project was being monitored at a distance by the Turkish navy, but no incidents occurred, according to Greek media.

InBnews reported that the Cyprus Energy Regulatory Authority (CERA) is expected very soon to take its final decisions but before that, there will be meetings/teleconferences with the project promoter and the European Commission.

With regard to the request by the promoter to eliminate the phrase “may” which will allow for full recovery of the money invested in case the project is not completed, according to information from InBnews, this is very difficult be accepted for the time being.

Philenews hosted an advertorial about the many advantages of the Interconnector for the energy companies and consumers of Cyprus.

Private renewable energy (RES) companies are trying to safeguard their enormous profits by trying to keep the electricity authority (EAC) out of the renewables’ sector, the chairman of the authority said.

He was reacting to statements by the head of the (private) Electricity Market Association, who said it was the EAC which was keeping a chokehold on its competitors & trying to enter the renewables’ sector.

“The private RES sector sells its electricity to business interests, under the guise of offering them a 10 per cent discount on EAC rates when instead they could be shunting the electricity they produce into the EAC grid mix, thereby lowering electricity costs for all consumers.

Cost of [photovoltaic] production is no more than 7 cents per kilowatt but private companies sell it to businesses for 27 cents per kilowatt”.

“They make 300 per cent profits, while the EAC’s profits are pegged at 4.6 per cent,” he said.  

Giorgos Asikalis was appointed by the Council of Ministers to the position of the chairman of the Board of Directors of the Public Natural Gas Company (DEFA).

He was a member of the Board of Directors and a press representative of the Cyprus Transmission System Operator.

Turkish Cypriots have reacted angrily to a reported deal struck between the Republic of Cyprus and tour operators to cut the number of overseas tourists visiting the occupied north while on holiday in Cyprus.

The deal was reportedly reached with tour operator Tui, which informed its partners in Cyprus that it would no longer promote or sell excursions to the north from the Republic after August 31.

The final discussion on the 2025 state budget is expected to take place in mid-September during a Cabinet meeting, according to Finance Minister Makis Keravnos.

Regarding the government’s investment plan, the Finance Minister confirmed that the implementation of the development programme aimed at strengthening Cyprus’ economic model will continue.

In areas with comparative advantages, such as tourism and attracting foreign companies, while also exploring new sectors.

In the short term, Keravnos explained, the goal is to achieve a full implementation of the Recovery and Resilience Plan.

He pointed out that the ministry is preparing to submit the fifth and sixth instalments, with significant funds expected to be received by the end of the year.

It should be noted that, following the required inspections by EU institutions on the payment requests for the second and third instalments submitted on December 15, 2023, and the fourth instalment submitted on July 3, an amount of €229 million is expected to be received.

A Business Delegation of CCI France-Liban to Cyprus is being organized in cooperation with the Cyprus Chamber of Commerce and Industry & Invest Cyprus.

20/08/24

INBNews with the title “Tourism: Israel’s market has fully recovered – Back to second place behind Britain” reported that Cyprus saw a surge in tourist arrivals in the first seven months of 2024, with numbers exceeding 2.2 million.

It appears that the Israeli market, in the midst of war, has fully recovered, returning to second position of the main markets for Cypriot tourism.

In comparison to July 2023, arrivals from Israel showed a 10% increase. For the first seven months of the year arrivals from Israel reached 230,921 compared to 235,624 in the January-July 2023 period, registering a slight decrease of 2%.

An op-ed by energy analyst Charles Ellinas notes that the main risk to the Great Sea Interconnector project is not technical or regulatory, but entirely political. It is the possible risk posed by Turkey.

It is not the role of the Cypriot and Greek energy regulators to deal with this and it is not appropriate to expect electricity consumers to foot the bill should Turkey intervene and make installation and operation of the GSI untenable.

The project implementor should address political risk to the Cypriot and Greek governments, the European Commission (EC) and the EU.

The provision for compensation guarantees, in case GSI is cancelled for political reasons, is also unacceptable.

Philenews reported that there was and is a great debate about the decision of the current Government not to grant the 100 million that the previous Government had requested as a loan from the Recovery Fund, but to allocate it to buy equity capital in the Great Sea Interconnector. According to unofficial information, the decision not to grant the Cyprus loan from the Recovery Fund as a sponsorship/gift to the implementing body was initially taken by the General Directorate of Competition, of the EU and imposed on the current Government. The General Directorate of Competition, according to the same sources, informed the Republic that any sponsorship to ADMIE and the Great Sea Interconnector would constitute illegal state aid.

Independent energy producers accused the Electricity Authority of Cyprus (EAC) of keeping a chokehold on competitors by placing obstacles in the way of the full opening up of the market.

Fanos Karantonis, head of the Electricity Market Association, said this is undermining the growth of the energy sector, to the detriment of businesses and consumers alike.

He added that despite promises that the electricity market would be fully liberalised by 2025, they still have no clear roadmap.

“We object to any action of the EAC to expand its living space (referring to the EAC’s attempt to branch out into the renewables sector) in the field of electricity production and to grow its size against the competition,” he said.

He asserted, the EAC maintains control “over those who manage the grid” – meaning the Transmission System Operator.

The government is preparing tenders ‘immediately’ for experts linked to the Larnaca port and marina project, Transport Minister Alexis Vafeades said after a two-hour meeting.

Three short-term projects were announced on July 31 which concern the study for the nautical club, the construction of the road that will connect with the marina, as well as the upgrading and maintenance of the marina.

For the latter, experts with the public works department will begin preparing tender documents, while for the nautical club, there will be a competition called for the architectural design.

Asked to comment about the port authority’s proposal to be involved in the project, the minister said the Larnaca port development is part of a strategic state plan for port infrastructure.

As such, what will happen with Vasiliko will affect Larnaca, he added. Until the bigger picture is clear, no decision can be made.

“We may need a €500,000 investment, maybe €1 billion.”

Asked if Kition could overturn any of the plans, Vafeades said “there are no such indications to date. We are moving forward with our plans.”

Both the minister and mayor said there was interest for investments both from the domestic front as well as from abroad.

“I believe it is very important to listen to the investors, it will make us all wiser.”

Already in the past two months, there have been requests for meetings over the projects, Vafeades said, including from Cypriots.

Philenews reported that according to Danos International Real Estate Consultants and Valuers, Cyprus and Greece’s property markets are maintaining a positive outlook and offering attractive investment opportunities, despite inflationary pressures and rising interest rates affecting much of Europe. Foreign investment continues to drive the residential sector in both countries, supplemented by local demand.

Foreign buyers acquired 6,900 properties in Cyprus in 2023, a 16% increase from 2022.

House price increased between 4.7% to 7.8% in Q1 2024 while apartment prices surged 13.9%.

Philenews reported that the central prisons will be replacing their CCTV system at a cost of 5.5 million euros.

The tender has already been awarded.

The Bank of Cyprus announced that it will hold a general meeting on September 13 to approve its listing on the Athens Stock Exchange (ASE) and to confirm its intention to delist from the London Stock Exchange (LSE).

19/12/24

The Cypriot government is “ready” to begin consultations with both Greece’s independent transmission system operator ADMIE and the country’s energy ministry to find an agreement on “all matters” related to the Great Sea Interconnector, Energy Minister George Papanastasiou said.

On this matter, he was asked about reported “American concerns” over the feasibility of the interconnector, but was swift to point out that they are not “American concerns”, but rather concerns expressed by the American consulting firm the government has appointed to aid to evaluate the cost-benefit analysis submitted to the government by ADMIE. “The company has provided some observations, some suggestions, and some amendments to some of the agreements proposed by ADMIE and which mainly concern future investors and shareholders,” he said.

The company, in their report, said it is “unclear whether the development and utilisation of the Great Sea Interconnector will ultimately decrease the cost of electric power for Cypriot consumers”. Additionally, it said the cost-benefit analysis’ evaluation of the impact of the project on the reliability of Cyprus’ electricity system is “lacking”, and that there was “no assessment of how the Cyprus to Israel connection (if built) will affect the commercial outcomes of the Greece to Cyprus connection”.

Kathimerini reported that critical questions surrounding the electrical interconnection have been raised in a letter from the Chamber of Engineers (ETEK) to the Ministry of Energy. The letter highlights concerns about the project’s cost, economic feasibility, technical studies, and potential consumer benefits.

Cyprus will respond in the coming days as to whether it will accept Chevron’s development and production plan for the Block 12 Aphrodite gas field, Energy Minister George Papanastasiou said. The latest iteration of the plan was submitted by the Chevron in September following the rejection by the government of a previous proposal, particularly the consortium’s request for a floating production unit (FPU). The revised plan would see the gas extracted from Aphrodite connected to an FPU, which would be connected to liquefaction infrastructure in Egypt, instead of creating new such infrastructure in Cyprus. The hope is to have discussions concluded by the end of January 2025 so that the extraction can go ahead.

Energy Minister George Papanastasiou  reconfirmed that drilling in the Block 5 area (‘Electra’) by ExxonMobil field would begin in mid-January.

ExxonMobil has two prospects in Cyprus’ Exclusive Economic Zone (EEZ) and the company has described Electra as “a very large prospect”

After a heated three-day debate, the state budget was voted through in parliament, with the backing of Disy, Diko, Elam, Edek, Depa and independent MP Andreas Themistocleous.

The budget for 2025 got a total of 37 votes in favour and 18 against, with Elam stipulating it was voting against any funds that would go towards migration.

Casting a negative vote were Akel, the Greens, independent MP Alexandra Attalidou and independent socialist MP Kostis Efstathiou.

Finance Minister Makis Keravnos expressed his gratitude to political parties that voted in favour of the budget for the “responsible stance” they demonstrated.

The 2025 state budget marks an increase in expenditure and significant changes in revenue and spending. Total expenditure for the budget amounts to €9.4 billion, reflecting a 3.25 per cent increase compared to the 2024 budget, while total projected revenues are expected to reach €11.75 billion, marking a 4.1 per cent increase.

Thousands of people will benefit from the expected reductions in some banks charges and preferential interest rates for vulnerable groups that banks are set to announce, Finance Minister Makis Keravnos said.

The minister was speaking following a meeting led by President Nikos Christodoulides with the CEOs of Bank of Cyprus and Hellenic Bank.

“Some charges are expected to decrease, and interest rates will become more favourable for certain social and population groups, such as consistent borrowers, pensioners, young people (especially those facing housing issues), small businesses and residents of remote areas,”.

The request of a 49-year-old German woman, accused of usurping Greek Cypriot land in the occupied territories, to be released on parole was rejected.

Her lawyer, among other things, raised the issue of translation, which according to him, affected the defense and rights of the 49-year-old (translation of witness material and problems in communication with his client).

He also raised the issue of degrading and inhuman treatment but the Criminal Court was not convinced.

The cabinet approved changes to its start-up visa programme to make it more attractive and effective, Deputy Minister for Research, Innovation and Digital Policy Nicodemos Damianou said.

The revised scheme, which has already brought 21 start-ups to Cyprus, allows founders and senior executives from non-EU countries to enter, reside and work in Cyprus, either individually or as teams, to establish new ventures or relocate existing start-ups.

INBnews reported that Cyprus is evolving into a magnet and a pole of attraction for foreign direct investment (FDI).

In 2023 foreign investments in Cyprus reached 3.2 billion euros, while 2,500 new jobs were created. The bulk of foreign direct investment (FDI) flowing into the Cypriot economy has reduced its reliance on the traditional triad of real estate, tourism and services, creating a new pillar of economic activity, that of technology. The technology sector contributes to over a tenth of Cyprus’ €32 billion GDP and employs around 17,000 people – around 3.5% of the workforce. By mid-2024, over 270 companies, of which 70 are international technology companies, had completed the relocation process through the Business Facilitation Unit (BFU) of the Ministry of Energy, Trade and Industry.

The Deputy Ministry of Research, Innovation and Digital Policy has launched the first Generative AI application in the public sector – a “Digital Assistant” on the gov.cy portal.

The cost of Christmas dinner in Cyprus has risen significantly this year, according to a new survey by the Cyprus Consumers Association. The study revealed sharp increases in staple ingredients, with tomatoes surging by 131 percent and cucumbers by 113 percent, while fresh meat prices rose by an average of 20 percent. Some items saw decreases, with merlin oranges and onions dropping by 17 and 15 percent respectively.

The Cyprus Shipping Chamber (CSC) announced that its director general Thomas Kazakos, has been appointed secretary general of the International Chamber of Shipping (ICS).

This makes Kazakos the first Cypriot to lead the global organisation. His term is set to begin on April 1, 2025.

17/12/24

The Cyprus Mail reported that the cost benefit analysis over the Great Sea Interconnector has dampened prospects for its viability, as it questions whether it can actually lower energy costs for consumers.

The analysis was carried out by Charles River Associates and notes:

“We find that it is unclear whether the GSI represents the optimal solution for Cyprus to 1) meet renewable energy targets and 2) lower costs to the Cypriot consumers.”

It said a comprehensive analysis of the effect of the project on system reliability “is lacking, and there is no assessment of how the Cyprus to Israel connection (if built) will affect the commercial outcomes of the Greece to Cyprus connection.”

Additionally, renewable energy benefits associated with the GSI “could be muted as solar power produced in Greece could offset anticipated solar power produced in Cyprus.”

Depending on power market dynamics in Greece, Cyprus and Israel, anticipated potential wholesale power price reductions in Cyprus could be impacted.

The analysis expressed concern over the Nexans contract, as it said it “provides a robust outline for delivering the work, but a number of clauses leave open opportunity for cost increases and liabilities to the project sponsors.”

It described the financial model as one that “generally functions as expected but suffers from poor or unsubstantiated assumptions”.

It suggested that to better understand the value of the project for the Cypriot people, a cost benefit analysis from Cyprus’ standpoint should be carried out, to “determine whether GSI represents the most appropriate solution to meet the RoC’s goals.”

AKEL party MP Irene Charalambidou has written to Auditor General Andreas Papaconstantinou requesting information about recent developments in the Cyprus-Crete electrical interconnection project and financial claims made by Greece’s power grid operator against Cyprus’s energy regulator. In her letter, Charalambidou specifically enquired whether the Audit Office has forwarded its findings to the European Public Prosecutor’s Office (EPPO), and if not, when it plans to do so “given recent developments”.

The MP referenced recent and older reports by Philenews regarding ADMIE’s financial demands, including the rejection of some claims by both Cypriot and Greek regulatory authorities and its insistence on recovering the full amount it claimed to have paid to EuroAsia to acquire the project rights. Charalambidou expressed concern in her letter about the possibility that funds paid to EuroAsia “may involve suspicious transactions and agreements made when EuroAsia Interconnector was still the project implementer”.

In August 2023 the former Auditor General had notified European and Cypriot institutions about preliminary findings from an investigation into state involvement in the project, which was then still being promoted by EuroAsia Interconnector.

According to the letter, regulatory authorities have approved ADMIE’s recovery of 12 million euros for expenses incurred by EuroAsia Interconnector, primarily for studies and surveys.

However, they rejected claims for costs associated with the Cyprus-Israel and Crete-Attica sections, as well as portions of the 48.8 million euros considered a business decision for project acquisition.

Liberal.gr (Greece) hosted an interview with Yonadav Buber, CEO of BaroMar. The article is entitled:  “The prospect of Greek-Israeli cooperation in energy storage, geopolitical developments and the GSI cable”

The summary notes that Yonadav Buber, CEO of Israeli BaroMar, one of the most innovative companies in the field of energy storage, speaks to Liberal about the prospect of Greek-Israeli cooperation in the storage sector and how the company’s technology can play a transformative role in strengthening the country’s energy independence. He also makes special reference to Greece’s great potential in energy storage, which can constitute a “reference point” not only for Europe, but also worldwide, while also highlighting the multiple benefits that arise from the interconnection of Greece-Cyprus-Israel via the submarine cable. He also emphasizes that, following recent geopolitical developments, priority should be given to energy independence, while also referring to the future of fossil fuels and RES.

Monday marked the start of a three-day debate in parliament on the 2025 state budget, culminating in a vote by the plenary on Wednesday.

The opposition parties – DISY and AKEL (it was much more critical) – launched an attack on everything, especially the financial difficulties faced by citizens due to high prices, housing and interest rates. Left -wing AKEL has stated it will vote against.

The 2025 state budget, as initially submitted, records an increase in expenditure and significant changes in revenue and spending. Total expenditure is projected at €9.4 billion, reflecting a 3.25 per cent increase compared to the 2024 budget, while total anticipated revenues are expected to reach €11.75 billion, marking a 4.1 per cent rise.

Philenews reported (citing a Turkish Cypriot newspaper) that since 2019, the number of permits granted by the occupation regime in the North to foreigners to acquire real estate approached 20 thousand. Of those, over 5 thousand made use of this “right”.

The Russia-Ukraine conflict and the Covid-19 pandemic caused a significant increase in applications for real estate. In the last 24 years, the number of foreign nationals who have applied to purchase real estate reached 54,606.

Philenews reported that the acceptance (by the govt.) of the proposal to assign the management of the marina to the Cyprus Maritime and Maritime Institute (CMMI) may have satisfied Larnaca’s stakeholders, however, the intense disagreement over the port remains.

Most of the city’s stakeholders insist that the Ports Authority’s proposal for €86 million worth of projects to develop the port in three phases must be examined, something that will also be raised at the Larnaca Development Committee meeting with the President of the Republic.

“We will explain to the President why we believe that the decision to have a port manager for five years is detrimental to development. We will ask them to explain to us why they are rejecting the Port Authority and its proposal for projects,” the mayor of Larnaca said, indicating that if they are not satisfied, they will proceed with the protest announced for January 11.

President Christodoulides met bank heads for a “useful and constructive exchange” on his proposals for interest rate changes to help vulnerable groups.

The proposed measures will be brought before the finance minister, after their evaluation by the bankers.

The Cyprus Chamber of Commerce and Industry (Keve) officially announced the appointment of Philokypros Rousounides as its new secretary general.

Rousounides will assume his duties on January 1, succeeding the current secretary general, Marios Tsiakkis who is retiring.

16/12/24

Philenews reported that the legal advisor of the state could not have been clearer and more warning to the Cypriot Government regarding his recommendations for the planned participation of the Republic of Cyprus in the investment capital of the Great Sea Interconnector (GSI).

The American firm Curtis, Mallet-Prevost, Colt and Mosle LLP submitted to the Republic of Cyprus the legal due diligence study for the project study which does not leave the slightest room for the Cypriot Government to participate in the share capital of GSI, unless the content of the “concession agreement” that ADMIE (operator) submitted to the Cypriot Energy Regulator dramatically changes.

The damning observations of the American law firm have also been transmitted to the Greek Government. Without a complete reformulation of the concession agreement, the Cypriot Government is expected to be driven to the wall by political forces and Cypriot public opinion, in the event that it consents to its participation in the share capital of GSI. According to the study, the terms and conditions proposed by ADMIE through the “concession agreement” for Cyprus’ investment in the share capital of GSI “are not sufficient (and satisfactory) to attract serious strategic investors to GSI”.

The Great Sea Interconnector (perhaps with Cyprus holding approximately 30% of the shares) will have the responsibility to secure the financing of the project (with loans of one billion euros or more) as well as the repayment of the loans or coverage of the guarantees, but the main decisions regarding the construction subcontractors will be made by ADMIE. Who will remain the owner of the project and its manager (and the recipient of the revenues), when it is operational.

All this means that the Great Sea Interconnector – instead of ADMIE– would end up absorbing losses and liabilities while  ADMIE would retain control of the project asset (which should belong to the company that will build the project-GSI).  

The advisors also note that ADMIE, and not GSI, will retain control of the 658 million euro European grant. Any investment (by the Republic of Cyprus) in the share capital in the Great Sea Interconnector could lead to financial losses greater than the envisaged equity investment in GSI (100 million euros). Elsewhere in the report, the firm predicts that the potential losses for the Republic of Cyprus could be much greater than the 100 million capital it may initially put up.

Addressing concerns about potential challenges in Cyprus’ involvement with the Great Sea Interconnector (GSI) project, Minister of Energy George Papanastasiou clarified that the project was progressing as planned and dismissed reports of significant delays or issues. He said Cyprus has political and financial support, including an annual contribution of €25 million for up to five years, capped at €125 million. He added that Cyprus has access to European funds that could be used to become a shareholder in the project, though this would depend on meeting specific conditions. He noted that a commissioned evaluation study conducted a cost-benefit analysis and suggested amendments to documents provided by the project’s implementing body (ADMIE). On the question of Cyprus’ involvement without ownership, the minister remarked that this is one of the considerations under discussion. He stressed that any financial contribution from Cyprus should ensure proportional ownership, reflecting its capital investment.

Chinese authorities have granted clearance for the departure of Prometheas, a floating natural gas gasification unit owned by Cyprus-based Natural Gas Public Company (ETYFA). A potential destination is Greece, with speculation pointing to facilities in Alexandroupolis, where the ship could undergo certification as a floating storage and regasification unit (FSRU). However, Asian locations are also under consideration for final modifications to the vessel. These updates would ensure its readiness for certification and eventual deployment at a gasification terminal. The unit could temporarily be deployed at another location until the infrastructure at Vasiliko in Cyprus is ready. This marks the beginning “of a new era for our energy sector,” government spokesman Konstantinos Letymbiotis said on X.

An article by the Middle East Economic Survey (MEES) entitled “Cyprus hopes for a major discovery by Exxon in the Electra target which will revitalize the country’s natural gas sector” notes that ExxonMobil believes that the upcoming drilling in in block 5 of Cyprus will find up to 30 tcf (trillion cubic feet) of natural gas. This would rival Egypt’s Zor and Israel’s Leviathan as the largest find in an area that the US ranks alongside Guyana as the largest new hydrocarbon discovery in the last 30 years. Commenting on the article the Minister of Energy George Papanastasiou 

said “we should wait for the drilling to take place because the studies may show some optimistic geological structures, but if we don’t drill we cannot know exactly what is there”.

In an interview with Phileleftheros, the Cypriot Vice President of the European Investment Bank (EIB), Kyriakos Kakouris, states that Cyprus’ priorities should include increasing the capacity of renewable energy sources, implementing the 10-year investment plan of the Electricity Authority of Cyprus (EAC), which will contribute, to the modernization of the transmission and distribution network. At the same time, efforts to complete the natural gas regasification terminal in Vasiliko should be accelerated. The specific project remains among the EIB’s key priorities for Cyprus and wants to see it completed. As regards the Greece-Cyprus electricity interconnection, there is a political agreement between the two countries and the EIB is in contact with the Greek and Cypriot governments, as well as with the Commission, to assess the project in the context of revised National Energy and Climate Plans.

The inauguration of two new solar parks is set to enhance the Electricity Authority of Cyprus (EAC)’s electricity production, marking a significant step toward green energy development. It will also support efforts to lower electricity prices. The Achera A and C solar parks, a collaboration between the EAC and the Holy Archdiocese of Cyprus, will supply electricity to the EAC at a cost of 5.1 cents per kilowatt-hour.

Two Hungarian women (that were living in Cyprus) facing charges tied to the alleged illegal sale of Greek Cypriot properties worth €58.5 million in the occupied North will continue to stay under detention until the next hearing, set for February 24. Last week the women had appealed their detention, arguing they were being treated unfairly but the Court of Appeal rejected their claims. The Supreme Court upheld this decision. The case has drawn attention across Cyprus, as property disputes in the occupied areas remain a sensitive issue for many.

A protest at Larnaca port has been put on hold, pending an “open agenda” meeting with President Nikos Christodoulides within a fortnight.

The protest was against the appointment of an administrator but the ministry of Transport sent a “satisfactory” letter to the municipality saying that the city’s marina would be given to the Cyprus Marine and Maritime Institute. However, the minister’s letter did not satisfy them on the issue of the port as Larnaca’s development committee expressed “intense reservations” regarding the temporary administration of the port by a private party. They want Larnaca port to be managed, for the time being,  by the Cyprus Ports Authority. The protest has been rescheduled for January 11, 2025.

Cyprus has reached a significant financial milestone, with its credit rating now firmly in the “A” category from all three major rating agencies—Moody’s, Fitch, and Standard & Poor’s. The latest upgrade by Standard & Poor’s was welcomed by President Nikos Christodoulides, who described it as a testament to the nation’s collective sacrifices and disciplined economic strategy. This achievement consolidates Cyprus among the most reliable economies in the European Union. He added that the government, institutions, and citizens now expect banks to take advantage of the favourable conditions by reducing loan interest rates and narrowing the gap between deposit and lending rates. The move to the “A” category has far-reaching benefits that include:

• Lower borrowing costs for both the government and businesses, thanks to enhanced creditworthiness.
• Increased economic stability, fostering job security and higher wages.
• Strengthened public finances, allowing for greater investment in critical sectors like healthcare, education, and infrastructure.
• Boosted foreign investment, particularly in high-value industries, creating well-paid jobs.

Two Russian nationals who obtained Cypriot passports in 2016 are under investigation in France for alleged money laundering, according to French media reports. The case came to light after MP Alexandra Attalides raised questions in parliament following an article published by the International Consortium of Investigative Journalists (ICIJ) on 23 October 2024. According to the ICIJ report, French authorities have seized assets worth $75 million connected to a money laundering investigation involving the two Russians, who allegedly financed property purchases on the French Riviera through suspicious channels. Interior Minister Constantinos Ioannou said that “the answer is confidential”. Sources told Philenews that both the Ministry of Justice and the Ministry of Finance are expected to become involved in examining the case for potential criminal offences and tax implications, should sufficient evidence emerge.

The proposed bill to impose a tax on banks’ windfall profits would jeopardise the stability of the financial system, government spokesman Konstantinos Letymbiotis said last Friday.

His comments came after the House plenary session rejected left-wing Akel’s proposal in a tied vote of 25 in favour and 25 against, with four abstentions. 

Left-wing Dialogos reported that according to an IMF report entitled “Bank Profits and Bank Taxes in the EU” banks in Cyprus enjoy the highest profit margin from interest rates among financial institutions in eurozone member states, but at the same time pay the lowest taxes.

This confirms the correctness of the bill, which was submitted by Akel but was not approved.

Cyprus’ economy is projected to maintain its resilience in 2025, with an anticipated growth rate of 3.1 per cent – significantly higher than the EU average – Finance Minister Makis Keravnos said.

He highlighted the strong economic performance in 2024, including a decline in unemployment to near full employment levels and inflation easing to approximately 2 per cent. In terms of public finances, Cyprus was among the best performing EU countries.

13/12/24

ENERGY/ECONOMIC NEWS

President Nikos Christodoulides announced his vision of transforming Cyprus from a consumer of defence products to a producer.

Addressing the opening of the 2nd international defence and security conference ‘Battlefield ReDEFiNED 2024’ in Nicosia, Christodoulides announced the preparation of legislation to institutionalise the high-tech defence industry aiming to strengthen national defence and stimulate economic growth. He also announced the institutionalisation of industrial collaboration defence programmes, the establishment of the defence research, technology and industry council, the establishment of the national registry of defence industry manufacturers in collaboration with the Cyprus chamber of commerce and industry, the increase of funding defence research and development, and government funding for national pavilions at international exhibitions.

He added that 16 Cypriot companies, with the support of the defence ministry, have secured participation in 37 different contracts of the European defence industrial development programme as well as of the European Defence Fund.

Parliament has rejected legislation proposed by left-wing AKEL party that would have imposed a 5% levy on bank profits for 2024 and 2025.

The bill, which would have raised an estimated €100 million over two years to fund housing schemes and interest rate subsidies, was defeated with 25 votes against from DISY, DIKO, DEPA parties and MP Alexandra Attalidou, while 25 MPs voted in favour, including members from AKEL, ELAM, EDEK, the Greens, DIKO MP Zacharias Koulias and independent MP Kostis Efstathiou. Four MPs abstained from the vote.

President Christodoulides had warned against proposals to tax excess bank profits.

The Cyprus Chamber of Commerce & Industry (Keve) called for “bold decisions and substantive measures across nearly all sectors of the economy to sustain the country’s developmental trajectory”.

Speaking at the chamber’s annual general meeting, Keve president Stavros Stavrou, emphasised that to maintain the momentum of our economy, action must be taken on two fronts.

Firstly, he called for “immediate initiatives to swiftly resolve domestic issues to fortify our economy”.

This, he said, should be followed by “new actions to capitalise on emerging opportunities both within and beyond Cyprus”.

Stavrou delivered strong criticism of the state, describing it as the economy’s “biggest patient” and proposed a series of recommendations.

President Nikos Christodoulides also addressed the assembly . 

Kathimerini reported that the ongoing legal battle between the Republic of Cyprus and the  Greek contractor (Intrakat) over the Paphos-Polis Chrysochous motorway project continues to create a complicated mess.

One of the key points of contention is a €7.2 million letter of guarantee with courts in Greece & Cyprus involved.

Intrakat also has other claims in court.

The Cypriot economy showed robust growth across key sectors during January-October 2024, according to the Cyprus Statistical Service (Cystat).

Μanufacturing output rose by 3.3 per cent, building permits marked a sharp increase of 46.5 per cent & motor vehicle registrations rose by 11.5 per cent.

Tourism also saw growth, with arrivals increasing by 4.6 per cent.

However, total imports of goods fell by 12.3 per cent while exports decreased by 5.3 per cent.

Cyprus is set to introduce a new AI-powered digital assistant on its gov.cy platform from 18 December 2024, offering citizens round-the-clock access to government information services.

Deputy Minister for Research, Innovation and Digital Policy, Nicodemos Damianou, announced the initiative as part of the broader “Digital Citizen” project, marking the government’s first implementation of generative AI technology in public services.

The chatbot-style assistant, developed in partnership with Microsoft, will operate similarly to ChatGPT through a conversational interface.

President Nikos Christodoulides reiterated the government’s commitment to bolstering Cyprus’ construction and real estate sectors during the annual general assembly of the Cyprus Property Developers Association.

The industry contributes 15 per cent of GDP and employs over 40,000 people.

12/12/24

ENERGY/ECONOMIC NEWS

Philenews reported that a major hurdle in securing departure clearance for the FSRU from Cosco’s Shanghai shipyard was cleared yesterday.

The Lloyd’s Register has approved certification for Prometheus (formerly LNG carrier Galea), which has been converted by Chinese CPP into a Floating Storage and Regasification Unit (FSRU.

This certification enables the vessel to depart Shanghai for its lengthy journey to Cyprus, with a planned stopover in Singapore.

The Lloyd’s certification specifically covers the vessel’s seaworthiness for port-to-port travel, rather than its FSRU operations for LNG regasification. The operational certification will be issued after final modifications are completed.

Before reaching Vasilikos, Prometheus must undergo testing at natural gas processing facilities in another country to receive operational certification under real regasification conditions.

While Egypt or the United Arab Emirates were initially considered likely locations for certification, sources indicate that discussions are now focused on transferring the vessel, which cost nearly 200 million euros, to the new natural gas regasification facilities in Alexandroupolis, Greece.

INBNews reported that the Cyprus Institute, in collaboration with Baromar – an innovative energy storage company – announced the launch of a joint research project on energy storage to be carried out at the Cyprus Institute’s PROTEAS Research Facility.

This initiative constitutes the largest private sector investment in a research project ever made in Cyprus, and serves as a precursor to new collaborations in the fields of renewable energy and energy storage.

Baromar is a global company that has developed a simple, cheap, and environmentally friendly energy storage solution. The operation of the project at PROTEAS is scheduled for next year. Baromar will then proceed to implement projects that will provide large amounts of energy (<200 MW) for longer durations (<8 hours), thus helping countries achieve their green transition goals and significantly reduce electricity prices for consumers.

The project involves the installation and testing of an innovative renewable energy storage system in compressed air stored in underwater tanks. This pilot system will test the technical and economic feasibility of such a solution and pave the way for innovative technologies to enter the global energy storage market, especially for longer-term storage. This will be the first compressed air energy storage project built in the EU in the last 50 years.

Disy and Akel parties have opposite views over the contentious ‘bank tax’ bill set to go to plenum today.

Submitted by left-wing Akel, the bill aims to tax banks on their ‘windfall profits’ and has prompted harsh opposition from the central bank director who warned MPs last week that this would deter investments.

The two women from Hungary, who are accused of usurping Greek Cypriot land in the occupied territories, worth over €58 million, will appear before the Nicosia Criminal Court tomorrow. On Tuesday, the Court of Appeals, rejected a request by the lawyers to remain free on conditions.

An ambitious plan to ensure every household and every sector has the water it needs was presented by Agriculture Minister Maria Panayiotou, who said reservoirs were still just a quarter full this year.

The programme includes a number of actions that include, in the short-term, the building of four mobile desalination plants, connecting communities with the grid and using wells in for irrigation.

Cyprus Business News reported that Cyprus-headquartered Blendiser Corporation and other companies, associated with billionaire Roman Avdeev, have finalised the sale of his remaining stake in Rossium Group and other assets, completing the exit from all Russian business holdings. The billionaire has indicated that he plans to move to Cyprus with his family.

10/12/24

Cyprus’s economy continues to show robust growth while major European economies are flirting with recession, maintaining a growth rate several times higher than the European average, new Eurostat data shows.

GDP grew by 3.8 percent year-on-year in the third quarter of 2024, compared to the eurozone’s 0.9 percent.

Quarter-on-quarter growth reached 1 percent, outperforming the eurozone’s 0.4 percent increase.

Cyprus’s 2025 budget and Stability Programme forecasts real GDP growth of 2.9 percent in 2024.

The Central Bank of Cyprus projects higher growth of 3.5 percent for 2024, up from 2.5 percent in 2023.

Cyprus Chamber of Commerce & Industry (Keve) president Stavros Stavrou is set to deliver a speech addressing key economic and business issues at the chamber’s annual general meeting on Thursday.

The event will be held in Nicosia and will feature a keynote address by the president Nikos Christodoulides.

According to a statement, Stavrou will outline the chamber’s comprehensive proposals for bolstering the economy and the business sector.

The United States and Cyprus have reinforced their joint commitment to fighting illicit finance, unveiling plans to enhance Cypriot capabilities in detecting and prosecuting financial crimes, according to a joint press release from the Republic of Cyprus and the United States Embassy.

The collaboration, which began in March 2024, has seen the U.S. Department of Justice (DOJ) and Federal Bureau of Investigation (FBI) working closely with Cypriot authorities.

The financial wellbeing of Cypriot citizens has marked a significant decline, according to the results of the Financial Wellbeing Index 2024.

The overall index value stands at 51.4 points (base 100), down from 56.7 points in 2023, highlighting the increasing challenges faced by citizens due to financial insecurity, insufficient savings and stress.

New data from Landbank Analytics has mapped the highest-demand residential areas across Cyprus’s districts for the period January to September 2024.

In Nicosia district, there were 161 house sales totalling €49.8m and 1,194 apartment sales worth €236.9m.

Limassol district recorded 237 house sales worth €165m and 1,469 apartment sales totalling €820m.

Larnaca district registered 191 house sales worth €64.35m and 1,113 apartment sales totalling €218.8m.

Paphos district saw 243 house sales worth €149.6m and 416 apartment sales totalling €138.4m.

In free Famagusta district, there were 86 house sales worth €28.6m and 143 apartment sales totalling €32.8m. Paralimni dominated both categories with 50 house sales averaging €412,000 and 105 apartment sales averaging €262,000.

Motor vehicle registrations in Cyprus rose by 10.1 per cent from January to November 2024, with the growing popularity of electric and hybrid vehicles driving the market shift.

Electric car registrations increased to 4 per cent, while hybrids surged to 36.9 per cent.

A bill to increase betting tax from 3% to 4.5% to help football clubs pay off their tax debts is expected to pass in parliament.

09/12/24

The lawyers of Israeli property developer Simon Mistriel Aykut, who stands accused of having developed and sold €43 million worth of property on Greek Cypriot land in the north, objected to the case against him on Friday, saying they do not believe he will receive a fair trial.

Aykut’s lawyer Maria Neophytou said her client will not receive a fair trial as it is impossible to summon witnesses who live in the north to a court in the Republic. She argued that Aykut has stated “since the beginning” that he was not involved in the purchase or sale of property, but that “his son did everything”. She also said there can be no transfer of information from the Turkish Cypriot police nor from the north’s companies register as the court recognises neither institution.

Additionally, she said that anyone who comes from the north with any suspicion that they have bought or sold land is arrested, offering up a list of would-be witnesses from whom Aykut’s company had purchased property.

Prosecution lawyer Andreas Aristides argued that according to Cypriot law, it is typically examined after the fact whether a trial is fair or not, so that the court has all the evidence before it when making such a decision.

Judge Christiana Parpotta said the court will issue a decision on the objection on December 20. Until then, Aykut will remain in custody. 

INBNews reported (includes photos of how it will look like) about the collaboration between Premium Access Group (the shareholders are Evgeni Leibovich and Shaul Keinan) and Thanos Hospitality Services (which will take over the management of Palm Beach Resort) to create a mixed development project that will includes 5 star hotel, residences & other amenities.

Philenews reported that the government is reconsidering its sudden decision to hand over Larnaca’s port and marina management to private operators for five years, following intense local opposition. Sources indicate that authorities are now exploring the possibility of transferring marina management to a local organisation rather than a private entity. However, the port’s future management remains unclear, with strong local opposition to privatising what many consider a profitable public asset. Larnaca stakeholders want it to remain under the operation of the Cyprus Ports Authority, that recently made a proposal to the govt. for development of the port at a cost of nearly 90 million euros. This proposal was not taken into consideration by the govt.

It is now unclear, both for the port & marina, what will happen in the long term. President Christodoulides confirmed potential changes to the initial decision. Despite assurances, the Larnaca Municipal Council has unanimously voted to organise protests outside the port on the 14/12/24 with the coalition parties DIKO and EDEK also participating, whose MPs Christos Orphanides and Andreas Apostolou openly expressed their disagreement with the government decisions.

Credit rating agency Fitch upgraded Cyprus’ credit rating from BBB+ to A-, becoming the second such agency in the space of three weeks to give Cyprus an ‘A’ grade.

The agency said it had upgraded Cyprus’ score on account of “the rapid reduction in public debt, strong fiscal surpluses, and limited fiscal risks”, as well as the “strong growth potential of the Cypriot economy, the positive medium-term prospects, and the improvement of the banking sector”.It pointed out that Cyprus “had one of the largest reductions in public debt relative to gross domestic product (GDP)” of all the countries they had evaluated this year, and added that its current forecasts suggest that the trend of debt reduction will continue.

The agency expects that Cyprus’ debt to GDP ratio will fall to 60 per cent next year.

Additionally, it said, it expects Cyprus’ government surplus to reach 3.9 per cent of GDP this year. 

Sigmalive reported that the clock is ticking for multinationals and other large companies operating in Cyprus and whose revenues exceed €750 million, since, as everything shows, they will soon say ‘goodbye’ to the favorable tax rate of 12.5%. The Republic of Cyprus must harmonize with the European Directive that provides for the securing of a global minimum level of taxation for these companies, thus marking the end of an era for one of our country’s strongest “cards” in its efforts to attract foreign investment.

A fire broke out on Friday at the Paphos desalination plant, causing extensive damage. The fire almost completely destroying the plant. Water authorities, agricultural officials, and local representatives have warned of significant impacts on the region’s water management as it has affected one third of the water supply of Paphos. The plant normally produced 15,000-20,000 cubic metres of water daily, essential for both drinking water and agricultural needs. The Agriculture Ministry will hold an emergency meeting to address the crisis and plan immediate actions to compensate for the loss. The incident is expected to accelerate plans for new desalination facilities across the island.

Police are investigating a case concerning dozens of trapped property buyers in Limassol, more than three years after the initial complaint was filed against a liquidator’s handling of company assets. The investigation, launched after lawyer Sofronis Sofroniou’s April 2021 complaint, centres on allegations of fraudulent practices spanning 30 years that have left numerous families at risk of losing their properties.

Cyprus has intensified its efforts to expand its Research and Development (R&D) landscape through a recent visit to Indonesia.

Chief Scientist Demetris Skourides and Ambassador Nikos Panagiotou held high-level talks with leading Indonesian research officials in Jakarta.

OPAP Cyprus is set to introduce Eurojackpot, Europe’s largest lottery game, to the Cypriot market. The game, which currently operates in 19 European countries, offers jackpots of up to €120 million through bi-weekly draws held in Helsinki, Finland. The game’s introduction requires Cabinet approval for exclusive rights. OPAP Cyprus, which currently operates eight lottery games in the Republic (including Lotto, Joker, and Kino), has submitted a proposal to add Eurojackpot to its portfolio.

Total beer deliveries in Cyprus dropped to 2.12 million litres in November, down 33% from 3.16 million litres in the same month last year, according to Cyprus Statistical Service data. Domestic market deliveries fell 33.7% to 1.96 million litres, while exports decreased 23.2% to 0.16 million litres from 0.21 million litres in November 2023.

05/12/24

INBNews reported that the aim of the collaboration between Premium Access Group (the shareholders are Evgeni Leibovich and Shaul Keinan) and Thanos Hospitality Services (which will take over the management of Palm Beach Resort) is the creation of an ambitious project in Larnaca & the transformation of the historic hotel into a high-standard resort.

Development projects at Larnaca port and marina and works at Vasiliko port will be going ahead, the transport ministry has said, while concerns have been voiced regarding a private company taking over Larnaca port temporarily.

The transport ministry said the government had stated from the onset that taking over the administration of Larnaca’s port and marina would be a temporary arrangement until private investors take over and would be cooperating with the ad hoc committee of Larnaca to draft a strategic plan. The Cyprus Shipping Association expressed its concern over the decision to delegate the management of Larnaca port to a private company.

In recent days there have been reactions from political parties & Larnaca stakeholders about the plans of the govt. while also boat owners are reacting demanding lower docking fees.

Foreign investments in Cyprus amounted to €3.5 billion last year, according to President Christodoulides who was speaking at a conference.

He also mentioned, among other things, that Cyprus “is on a remarkable economic course.

Cyprus achieved record-breaking tourism results in 2024, according to Deputy Minister of Tourism Costas Koumis.

October set a new benchmark, with arrivals surging by 26 per cent compared to 2022 & revenues by 31%.

Koumis praised the sector’s resilience in the face of challenges such as geopolitical instability in the Middle East, economic pressures in Europe, and ongoing issues in the aviation industry.

According to the Cyprus Chamber of Commerce President Stavros Stavrou seasonality remains a persistent challenge.

The President of the Association of Travel Agents Harris Papacharalambous noted that Cyprus ranked sixth in the EU for tourism’s contribution to GDP at 12.9 per cent while issues such as high operational costs, staff shortages, connectivity gaps and competition from the occupied north remain pressing concerns. 

Real estate and IT are the key drivers of Cyprus’ third quarter services growth.

Real estate activities recorded an 11.5 per cent increase compared to the same period in 2023 while information and communication activities followed, rising by 8 per cent.

Cyprus showcased its advantages as a tax destination during a gathering in London, highlighting benefits for high-net-worth individuals amid UK tax reforms.

More than 150 participants attended the event, including more than 120 professionals from the UK—such as lawyers, accountants, private bankers, and family office managers—and over 30 experts from Cyprus.

02/12/24

ENERGY RELATED NEWS

Energean CEO Mathios Rigas has called on governments to develop new export routes from Israel to neighbouring Egypt and Cyprus, as he urged Israel to issue new offshore oil and gas exploration licences to meet rising demand in the region.

ECONOMIC NEWS

Concrete manufacturers and workers are to continue their strike after the failure to reach an agreement over the regulation of overtime pay. Both trade unions and employers’ groups had approved a deal put forward by Labour Minister Yiannis Panayiotou regarding a new collective labour agreement, but trade union Sek announced that the deal did not include any agreement regarding overtime.  The Cyprus Chamber of Commerce & Industry President Stavros Stavrou expressed optimism this morning that the major employer-employee conflict in the ready-mix concrete sector will end today and work will resume immediately. Considerable damage has already been caused to the economy (€80m to €100m).

Philenews reported that Turkey is losing business following a rise in arrests of property usurpers by the Republic of Cyprus and is now increasingly resorting to various other methods to bring in more revenue for the illegal entity in the occupied territories. Turkish magnates are buying Greek-Cypriot properties from foreign nationals, while land developers are approaching Greek-Cypriot owners and on many occasions pressuring them into selling off their land, sometimes also using the so-called ‘compensation committee’. What’s more, even Greek-Cypriots living in the government-controlled areas, appear to be acting as go-betweens, trying to persuade owners to sell their properties to Turkish buyers. This is their contribution, the article notes, ‘to the Turkification of the island’. It is further added that the construction industry in the occupied territories has taken a hard hit.

The government’s plan for a private company to operate the Larnaca port and marina on a temporary basis until a new investor is found to upgrade its infrastructure puts the development in danger, the town’s mayor Andreas Vyras said. He added that the government “did not discuss the plans with us” and that the existence of a temporary private operator may make it more difficult for plans to be devised. “I think they have not thought this through properly & the decision they announced over the marina is a massive risk for Larnaca” saying that the town’s council’s ad hoc committee on the matter will be convened. Philenews reported that there are two reasons that led the government to proceed with the decision to give the management, operation and maintenance of the port of Larnaca to a private company and, at the same time, to separate the two functions of port and marina. The first has to do with the decision already taken to strengthen the regulatory role of the Cyprus Ports Authority (CPA) and the second is for strengthening free competition between the ports. By the government’s decision, the management of the port and the marina will be assigned separately to private companies that, for the next 5 years (after the contracts will be signed), will benefit from the profits but will have no obligation to proceed with development projects, thus freezing the development prospects of Larnaca.

Cyprus’s general government recorded a surplus of €1,431.8 million (4.2% of GDP) in the first ten months of 2024, compared to a surplus of €664.8 million (2.1% of GDP) in the same period of 2023, according to preliminary data.

Supermarkets are sending information to the commerce ministry in time for a pilot e-kalathi application to go into operation before Christmas. The trial app will enable shoppers to make price comparisons for essential groceries but it is unclear whether retailers of all sizes would be able to respond in time.

Cyprus’ average monthly earnings rose by 7.3 per cent in 2023, however, there were stark differences across sectors, according to the Cyprus Statistical Service.

While agricultural workers earned an average of €924 per month, those in finance averaged €4,493, reflecting significant income disparities.

The Cyprus Chamber of Commerce and Industry organized business delegation to Slovakia, and the Czech Republic in collaboration with the Energy Ministry, the Cyprus Trade Centre in Vienna, and the Cyprus-Slovakia and Cyprus-Czech Business Associations.

27/07/2024

The Legal Service will be consulted first, and then the Ministry of Transport will respond to the complaints of Kition Ocean Holdings, according to a statement. In a letter it made public yesterday, Kition Ocean Holdings blamed authorities for botching the handover of operations and equipment at the Larnaca port and marina area and said it reserves the right to sue the government for “reputational damage” caused to it by various leaks to the media that cast the consortium in a bad light.

Philenews reported that Israel’s tourist market has opened up for good lately for Paphos. In the last 24 hours, the Israeli invasion of Paphos has hit ‘red’, with one flight after another from Tel Aviv landing at Paphos airport, creating a scene that according to the authorities is even more massive than the period before the start of military operations in the Gaza Strip. It is characteristic that in addition to the daily flights from the three major airlines that traditionally operated the route, namely EL-AL, TUS and Israir, for a few days now and new companies are constantly making their appearance carrying tourists, while EL-AL has launched even larger aircraft than usual to meet the demand.

Media, in their intl. sections, reported that Energean is proceeding with the development of the Katlan natural gas field offshore Israel, and announced to the London and Tel Aviv stock exchanges that it had received the Final Investment Decision (FID) for the project.

Philenews reported that Energean had several years ago submitted proposals to the Cypriot Government for the transfer of natural gas from its fields to Vassiliko, but its proposals were rejected or shelved, in view of the decision to purchase and import LNG from other markets or the exploitation of Cypriot fields. To date, neither one nor the other has happened.

Philenews reported that the Government is making moves in various directions to ensure that work will be activated as quickly as possible for the natural gas regasification terminal in Vassiliko.

The receipt of the floating FSRU from Cosco’s shipyard in Shanghai is a priority and various actions have been taken in this direction so that the ship can be manned by qualified personnel and sail to the Mediterranean.

However, there is currently no picture of the position CPP will take, even though its termination of the contract may also change its legal relationship with the FSRU Prometheus. CPP still claims an amount of around 35 million euros for work on the ship. The authorities in Cyprus are concerned by the financial differences that seem to exist between CPP and Cosco, the company that converted the LNG Carrier into an FSRU. According to info., the plan B referred to by the President is linked to the alternative option of renting another FSRU. Politis reported that this could cost more than 300, 000 euros per day.

However, for the FSRU rental to have meaning and operational value, work on the jetty and the onshore part of the terminal will have to proceed quickly. Provisions in the original contract with CPP, are deemed by legal advisers to allow the continued use of subcontractors who worked with the Chinese company. The subcontractors have assured the government  that they are ready to resume work immediately and are planning to take legal action against CPP.

An op-ed in Philenews notes the recent statement of the President that theChinese CPP-METRON Consortium Ltd (CMC) should never have been given the project to implement the liquefied natural gas terminal in Vassiliko, adding that despite the warnings of the Auditor General, everyone insisted (during the Anastasiades government) on approving the project to the consortium, citing its urgency. The Auditor General in a special report in January 24, revealed all the scandalous procedures of the awarding of the project. And despite the delays, they gave the contractor an additional €25 million (due to an increase in the value of raw materials) that the Auditor General had strongly disagreed with. The Auditor General had also noted very serious violations of public procurement legislation during the tender evaluation stage.

Philenews reported that the Cyprus Energy Regulatory Authority feels very constrained by the pressure it receives from many sides, inside and outside Cyprus, to modify the decision it took on July 2, rejecting the request of ADMIE to allow recovery of its costs for the electrical interconnection from 1/1/ 2025. According to info., the Cyprus Presidency seems to favour and requests a change in its decision. It is possible the new decision by CERA may not be unanimous.

According to info., CERA has assigned PwC Cyprus the responsibility of evaluating the new data submitted by ADMIE. CERA’s response is expected before August 12.

A Memorandum of Understanding (MoU) for the construction of a new optical fiber cable system that will connect Greece with Saudi Arabia was signed by Grid Telecom, a subsidiary company and telecommunications services provider of ADMIE, and Dawiyat Integrated,a subsidiary of the Saudi Electricity Company (SEC).

Media reported that in recent days, Turkey has deployed up to five warships near the maritime boundary between Kasos and Karapathos islands, just outside Greek territorial waters. This area has been the site of operations by the Italian-flagged vessel Ievoli Relume, which is conducting surveys for the upcoming Great Sea Interconnector project linking Crete and Cyprus.

Cyprus’s energy security has increased over the 2002-2022 period, but along with Malta and Luxembourg it remains the most vulnerable euro area member state in terms of energy supply security, according to analysis by the Directorate for Policy Strategy and of Institutional Relations of the European Stability Mechanism (ESM).

The Cyprus distribution system operator reported an all-time record recorded in electricity consumption on Monday that reached 1,290 MW, of which 42 per cent was covered by electricity generation from Renewable  Energy Sources.

Non-performing loans (NPLs) in the Cypriot banking sector remained virtually unchanged in May, totalling €1.77 billion compared to €1.80 billion the previous month, according to a report released this week by the Central Bank of Cyprus.

The NPL ratio against total loans held steady at 7.4 per cent.

Passenger complaints against poor treatment by airlines are at an all-time high, according to the Cyprus consumers association.

18/07/24

Agricultural Minister Maria Panayiotou announced a number of measures aimed at tackling the extended period of drought with a total estimated cost of 6 million euros.

Measures range from increasing fines to increases in water treatment systems and offering subsidies for investments in smart irrigation systems to save water, reduce losses & to install small seawater treatment plants for irrigation purposes.

Tourist arrivals in Cyprus displayed a slight yet steady increase in June 2024, recording a 5.5 per cent rise compared to the previous year. This upward trend is also reflected in the first half of the year, with arrivals from January to June 2024 showing a 2.4 per cent increase, compared to the same period in 2023.

The United Kingdom continues to be the primary source of tourists, contributing 35.6 per cent of the total arrivals in June 2024. Other significant contributors include Israel, accounting for 10.7 per cent (51,814 tourists), Poland with 7.5 per cent (36,202 tourists), Sweden with 4.9 per cent (23,639 tourists), and Germany at 4.5 per cent (21,552 tourists).

On the domestic front, there has been a slight decline in the number of Cyprus residents travelling abroad with Greece remaining the most popular destination, accounting for 37.5 per cent of trips.

16/07/24

Left-wing opposition Dialogos reported that the position of Larnaca, as conveyed to the Minister of Transport and Works at the meeting of June 10,  is that the implementation of some infrastructure projects by the state for the Larnaca port/marina project can proceed immediately, since there are already plans and some permits, while the finances of such an undertaking are not prohibitive. The plan, as submitted to the Minister of Transport and Works, is even accompanied by costing based on Kition’s master plan and briefly provides for the following:

• Construction of the Yacht Club (12 million euros)
• Upgrade of the marina by modernizing the berthing infrastructure without increasing the capacity (10 million euros)
• Landscaping (2 million euros)

These are the three main pillars of the Larnaca Development Committee’s proposal to the government, while a fourth project is the new road connecting to the main gate of the port.

The estimate of the Committee is that the amount needed for the first projects so as to show that the development has started is between 30 and 40 million euros.

The final decision belongs to the President. As regards the port, there have been voices from important players for the port to remain under the operation of the public sector and to be separated from the marina and this position seems to be gaining ground.

A scenario prevailing in the discussions is that the upgrading of the port focuses towards facilitating passengers with some commercial uses (‘clean cargo’ such as cars, iron, etc.). And polluting cargo, such as plaster, to be transferred to the port of Vasilikos.

Kathimerini reported that following the public admission by Energy Minister George Papanastasiou, a consensual separation between Cyprus’ Natural Gas Infrastructure Company (ETYFA) and China’s CPP-Metron Consortium Ltd is imminent. Official announcements are expected this week, as the minister will be briefed on Tuesday. The coordinated exit of the Chinese consortium from the unfinished Vasilikos energy terminal has damaged the Republic of Cyprus’ image and will likely deter international companies from future projects. This issue adds to growing concerns following the failed Larnaca port redevelopment and highlights the shortcomings in the tender and award processes for large public works. The agreed exit will lead to financial losses for Cyprus due to ongoing negotiations with the Chinese.

10/07/24

Philenews reported “Israeli… invasion of Paphos after the war in Gaza” that the Israeli market has now opened up for good to Paphos and the province’s airport already has daily flights from three airlines, EL-AL, TUS and Israir while new airlines of Israeli interests have appeared in Paphos in recent days.

Left-wing opposition Dialogos reported that there is no planning for what the future holds for Larnaca port, two months after the collapse of the agreement with Kition. The Cyprus Ports Authority has been given the temporary management of the port without specialized staff and equipment.

The contract regarding the construction of the Liquefied Natural Gas (LNG) Receiving and Regasification Terminal in Vasilikos is moving towards termination the Minister of Energy announced in Parliament.

The Natural Gas Infrastructure Company (ETYFA) studying other ways to complete the project. As the Minister of Energy explained, the many extensions taken by the consortium demonstrate that there was no destination for the completion of the project. The Minister of Energy also informed that the negotiations with the construction company for the shipment of the floating unit are in the final stage. He explained that there are three parts to the terminal, with the most important being the floating unit. The other two are the jetty and the part of the terminal on land.

“We believe the two last ones are easy to complete. Their construction is already at 60 per cent and the remaining 40 per cent we believe we can complete with our own means,” Papanastasiou said.

The President of CERA, before of the Parliamentary Energy Committee, said that next Monday ADMIE has been summoned to CERA in relation to the new data on the basis of which it has requested a review of the regulator’s decision not to allow the charging of Cypriot consumers before the implementation of the Great Sea Interconnector project. The Minister of Energy said during the session that the Government has also requested the Nexans contract but also that the cost-benefit study which is expected to be delivered by ADMIE to be evaluated by experts so that the final investment decision can be made. The study has also been requested by the Electricity Authority of Cyprus. The Minister explained that Israel has recently strongly stated in the context of a teleconference and another meeting with a physical presence here in Cyprus, that it would like to connect with Cyprus as soon as possible. We understand why, he said, it is a matter of security of electricity supply under the conditions it is in and possibly these conditions require a more immediate settlement of the interconnection issue with Cyprus. The President of the Parliamentary Energy Committee, said that the passing on of such a large cost to consumers is not acceptable without knowing the final cost, if it will work & when.  The President of the Cyprus Wind Energy Association questioned whether it would be good for the energy security and supply of Cyprus to depend on a private company and warned that in the case of the implementation of the project and the channeling of Greece’s electricity surplus to Cyprus, “all the RES projects could go into default, all the companies will go bankrupt, the banks will go bankrupt”. The President of the Electricity Market Association said they are in favor, in principle, of an interconnection as well as in favor of importing cheap electricity but maintain  their reservations.  The President of the Cyprus Consumers Association Marios stated that it is unthinkable for the consumer to start paying before the completion of the project.

Philenews reported that due to the absence of available funds from ADMIE for the payment of Nexans (that manufactures the cable for the electrical interconnection of Cyprus with Crete), the Greek side, assisted by the General Directorate of Energy of the European Commission, insisted during a teleconference, on the request that the Energy Regulatory Authority vary the decision it took otherwise the project will be stopped. According to info., a representative of Nexans also attended the teleconference (has signed a contract with the implementing body for 1.4 billion euros) who said that if CERA does not approve in the next few days the start of the recovery of the costs by ADMIE, the construction of cable will stop. The participation of Nexans caused discomfort to Cypriot authorities, who consider it an attempt to extract with threats and blackmail the consent of CERA.

The Electricity Authority of Cyprus must “change” to become a competitive organisation by the time the electricity market opens up, the energy minister said, noting the importance of driving down electricity costs. EAC chairman outlined the key short-term challenges ahead. These include the anticipated liberalisation of the electricity market and consequent competition, electrical interconnectors, the arrival and use of natural gas for power generation, upgrades to the Dhekelia power station, and the installation of a new turbine at the Vasiliko power plant.

At the same time, said Petrou, the transition to green energy and the reduction in greenhouse gas emissions is a “top objective”.

Cyprus and the FBI are to work together on clearing Cyprus’ name regarding the naturalisation through the citizenship by investment programme, it was announced after President Nikos Christodoulides met FBI assistant director Michael Nordwall.

Passenger numbers at the occupied north’s Ercan (Tymbou) airport increased by almost a third for the first six months of 2024 over the same period last year.

In total, 2,181,947 passengers passed through the airport during the first six months of the year.

Civil service trade unions rejected the recommendations of the International Monetary Fund (IMF), which had called for the rationalisation of salary scales and expenditures related to the state payroll.

09/07/24

President Nikos Christodoulides suggested there would be news even next week over the Larnaca port and marina project.

At the end of August, it is expected that the proposals for the future investment of the port and the marina of Larnaca will be submitted. This was mentioned during the discussion of the supplementary budget of 8.4 million euros for the Ports Authority.

MPs appeared skeptical with the request of the Cyprus Ports Authority for an extra €8.4 million.

The Association of Owners of Docked Vessels, in a letter sent to the Minister of Transport, expresses its disappointment at the inability of the Ministry of Transport to respond to the basic requests for the return of docking fees, services and contract terms to the levels before the management by Kition Ocean Holdings. They demand suspension of the issuance of docking tariffs by the state, until the tariff policy for the Larnaca Marina is officially decided by Parliament.

Media reported that the 4th case of usurpation of Greek Cypriot properties in the occupied territories, within this year, is being investigated by the Republic. The Police recently arrested a 49-year-old German woman while the cases with Turkish lawyer Akan Kurciat, Simon Mistriel Aykut (remains in custody) and German Martin Josef Rikels (national and European arrest warrant pending against him) preceded this.

Turkish Cypriot representative at the Parliamentary Assembly of the Council of Europe (PACE) Oguzhan Hasipoglu called for an investigation to be launched after the Republic of Cyprus made a series of arrests over the sale of Greek Cypriot owned property in the north.

Philenews reported that the implementing body (ADMIE) of the Interconnector project and the General Directorate of Energy of the EU will try today in a teleconference with the Energy Regulatory Authority, the Ministry of Energy and the Greek regulatory authority to convince that the project is not sustainable if Cypriot consumers don’t pay about 25 million a year until 2030. ADMIE has already submitted a request to review the decision  not to allow the recovery of costs from 1/1/2025. It has so far failed to secure an agreement with any bank or investment organization to finance the project, but the Commission agrees that if the recovery of 100-125 million euros over a period of five years is approved, creditors and investors will ‘come running’. At the same time, ADMIE wants a review of the regulatory framework, so that it is fully covered financially, if the interconnection does not proceed due to a serious external factor (obviously Turkey).

The teleconference is not expected to lead to new decisions by CERA today. ADMIE is expected to submit on July 11 to the Minister of Energy the cost-benefit analysis carried out on its behalf and then the evaluation process of the study by an international firm, from the University of Cyprus and the Cyprus Institute. It remains doubtful whether CERA will revise its decision before the Government of Cyprus takes a position regarding the viability of the project and regarding its participation in the shareholding structure of the Great Sea Interconnector.

The only certain thing at this stage is that most private producers and suppliers of electricity in Cyprus wish for the ‘wreck’ of the interconnection. Because without it, the scope for real competition in the internal electricity market of Cyprus, in favor of consumers, is significantly reduced. And this ensures their super profits.

The 2025 state budget will be in surplus, President Nikos Christodoulides said.

After a Council of Ministers meeting, Christodoulides held an extraordinary session during which he outlined the government’s financial goals and stressed that the goal is for the budget to align with the administration’s strategic priorities.

The Ministry of Agriculture unveiled a revised ratio recipe for goat and sheep milk content in Halloumi cheese, aiming to comply with Protected Designation of Origin (PDO) regulations while supporting livestock farmers.

For the period from February 1, 2025, to August 31, 2025, the quota increases to 30% (an increase of +5%)

In the seven months till then, production remains the same, with sheep and goat milk at 25 per cent.

For the dry period (September to January), there were two regulations, one for 10 per cent and one for 19 per cent, which now become the average of the two quotas, set at 15 per cent.

Goat and sheep farmers’ incentives will target infrastructure upgrades, genetic improvement, and increased production units to address seasonality challenges and encourage year-round production.

Dairy farmers will benefit from the measures that aim to limit further expansion of cow’s milk for Halloumi and encourage environmental footprint reduction in line with EU commitments.

Approximately 7,000 people in Cyprus work in forex, although the actual number may potentially be much higher than that, according to recently published research from TradeInformer, a business-to-business news and research portal that covers the global retail trading industry.

This means that approximately 1.65 per cent of Cypriot private sector employees work in the forex industry.

In addition, these people also comprise close to 40 per cent of financial services workers in Cyprus, with similar numbers to those working in the Cypriot banking sector.

02/07/24

 All Larnaca port and marina workers (72 in total) have been hired by the Larnaca and Famagusta District Development Agency, the transport ministry announced.

The process is part of a deal between the ministry and workers, after the government terminated its concession agreement with Kition Ocean Holdings.

At the same time, the ministry has begun talks with Larnaca’s ad hoc committee on the strategic plan to implement the development project for the Larnaca port and marina.

The aim is to announce the next steps by the end of July. The management of the port has been temporarily assigned to the ports authority and the marina to the transport ministry.

Talks are ongoing with Kition Ocean Holdings to hand over the equipment.

Cyprus’ Energy Regulatory Authority (Cera) has received the proposal of Greece’s Independent Power Transmission Operator (Admie) on what the revenue of the Israel-Cyprus-Greece (Great Sea Interconnector) electricity interconnection project should be from the implementing entity.

This is to offset the amounts that will be spent next year on advancing the project.

A similar request was submitted to the Regulatory Authority for Energy of Greece.

Philenews reported that a few days ago, a letter was sent to CERA  with additional requested information so as to examine the broader issue of recovering the implementation costs for the Great Sea Interconnector.

The regulatory authority in Greece has already agreed that ADMIE’s cost recovery will begin in 2025. However, CERA has not yet made such a decision, as it appears to favour starting the consumer charges at a later stage.

Energy Minister George Papanastasiou said last week that Cyprus will take any decision on the project after receiving and evaluating the cost-benefit study from the implementing agency, which he said he expects on July 11.

Banks as well as government officials are against the idea of taxing the windfall profits of commercial lenders, a proposal brought by opposition party Akel.

The bill envisages a 5 per cent ad hoc tax imposed on banks’ so-called windfall profits during 2024 and 2025. These profits are described as deriving from the high interest rates on loans charged by banks.

It also wants a ‘social solidarity fund for the support of borrowers’ – into which the proceeds from the windfall tax would go (estimated at €100 million for 2024 & 2025).

Akel said that last year banks altogether made €973 million in profits from interest. Total income from charging interest came to €2 billion. Overall profits (from all sources) amounted to €1.3 billion.

Finance Ministry officials believe that Akel’s bill might breach provisions of the constitution.

Cyprus saw a 20.1 per cent increase in tourist arrivals during 2023, reaching 3,845,652.

Over one-third of visitors staying in Paphos.

Tourism revenue rose by 22.6 per cent, totalling €2.99 billion.

The United Kingdom was the primary source of tourism for Cyprus in 2023, accounting for 33.9 per cent of total arrivals, followed by Israel (10.7 per cent).

A survey from Hermes Airports shows that 2% of tourists visiting Cyprus during the winter months (October 2023 – March 2024) stayed in the occupied areas. Additionally, 3% visited the occupied areas while staying in the free areas. Most visitors to the occupied areas were British and Americans (4%), followed by Germans (3%), Austrians (3%), Israelis (2%) and Poles (2%).

2% equates to about 56,000 people out of 2.8 million visitors, or roughly 266 people per week.

Paphos was the top destination for winter tourists from Lithuania (73%), Poland (70%), and the UK (62%). Larnaca saw many visitors from Lebanon (57%), Israel (45%), and Romania (41%). In Limassol, tourists mainly came from Israel (39%), Italy (33%), and the USA (26%). Free Famagusta attracted visitors from Serbia (29%), Austria (25%), Latvia (13%), and Germany (13%).

The Cyprus government saw its surplus rise to 1.9 per cent of Gross Domestic Product (GDP) between January and May 2024, up from 1.1 per cent in the same period last year.

This increase translates to a surplus of €590.6 million, marking a significant rise from €322.7 million previously.

01/07/24

Philenews reported that the Minister of Energy is upset by information that about six employees of the Natural Gas Company (DEFA) were in Spain for a tour / briefing / training at a floating natural gas terminal, while the Ministry Energy is in tough negotiations with Chinese CPP for the Cypriot FSRU Prometheus and the resumption of work at Vasilikos. Meanwhile, the negotiations to hand over the FSRU without additional cost have not led so far to a positive development. The consortium is claiming an extra 32 million euros, on top of what it has already been given for the ship (about 190 million euros). But the focus now is for the floating unit to receive final certification from Lloyds that it can safely sail. 

Left-wing Dialogos reported that there are many important and critical questions regarding the electrical interconnection of Cyprus with Greece and Israel, AKEL MP and member of the Energy Committee, Kostas Kostas, said in an interview.

He emphasized that this is a project of enormous importance, but specific reasons, such as technical difficulties and finding the necessary funds, may lead to its non-implementation. At the same time, he points out that the possibility of Turkey creating obstacles, citing the illegal Turkish-Libyan MOU.

Greek media reported that the Turkish navy is monitoring the work of an Italian ship within the Cyprus Exclusive Economic Zone (EEZ), which has undertaken the laying of telecommunication cables from Cyprus to Greece and then to Italy.

Nicosia will be taking all the necessary action in dealing with increasing cases of illegal Greek Cypriot property in the occupied North by Turkish developers and other foreign individuals, said President Christodoulides.

Philenews reported that the actions of the Republic of Cyprus to prosecute usurpers of Greek Cypriot properties are causing intense concern in the occupied territories. After the arrest of Simon Minstriel Aykut, other cases are being looked into although there are enormous difficulties. From the available evidence, it appears that Turks, Turkish Cypriots, Russians, Israelis, Iranians, British and Europeans are involved.

Global credit rating agency, Morningstar DBRS, has upgraded its growth forecast of the Cypriot economy by 0.3 per cent in 2024. In its revised June key macroeconomic scenario, the Cagency said it expects the Cypriot economy to grow at a rate of 2.7 per cent in 2024.

DBRS also revised the unemployment rate in Cyprus. Compared to its forecast last March, the agency now expects the unemployment rate to fall by a further 0.2 per cent to 5.9 per cent in 2024.

Egypt is an important partner of Cyprus in the region, said the Minister of Energy, Trade and Industry, George Papanastasiou, on the occasion of the EU-Egypt Investment Conference held on Saturday in Cairo. Cooperation mainly concerns energy, where there are discussions for natural gas from the EEZ of Cyprus to reach Egypt for liquefaction”. There are also Cypriot companies that have investments in Egypt, mainly related to fish farming. Contacts are being planned with the Ministers of Petroleum, Electricity and Trade of Egypt soon.

Average gross monthly earnings of employees in the first quarter of 2024 increased by 5.7% to €2,378, compared to €2,251 in the first quarter of 2023. 

The average gross monthly earnings of men are estimated at €2,564 and of women at €2,145.

40% of employees received in the first two months of 2024 gross monthly salaries below €1,500 (34% Cypriots and 52% non-Cypriots), 38% between €1,500 – €2,999 (42% Cypriots and 29% non-Cypriots), the 12% between €3,000 – €4,499 (15% Cypriots and 7% non-Cypriots), 6% between €4,500-€5,999 (6% Cypriots and 5% non-Cypriots) and 4% greater than or equal to €6,000 (3 % Cypriots and 7% non-Cypriots).

A delegation from the International Monetary Fund (IMF) held informal discussions with members of the House Finance Committee during their technical assistance mission to Cyprus. The visit was arranged following a request from the Finance Ministry with the ultimate objective of streamlining the state salary structure. According to Philenews, Practices and methods implemented by the Troika in 2013, under the framework of the fiscal consolidation memorandum, are included as proposals in the study conducted by the IMF. Among the recommendations is the reduction of salaries and the abolition of the Cost of Living Allowance.

Over a hundred influencers from the UK, Germany and Turkey will have all costs covered to help promote tourism in the occupied north.

The 12th Invest Cyprus International Investment Awards presented by PwC Cyprus are taking place in Nicosia on the 3rd of July, paying tribute to major international investors in acknowledgment of their contribution to Cyprus.

25/06/24

Turkish Cypriot leader Ersin Tatar called a meeting last Friday to discuss the Cyprus problem and the recent remand of Turkish-Israeli businessman Simon Mistriel Aykut, who is in custody for developing on Greek Cypriot property worth €43 million.

He called on the Republic to use “common sense” regarding the Immovable Property Commission (IPC), accusing the Republic of intimidating Greek Cypriots to not claim compensation through it. He pointed out that the IPC was recognised as an effective domestic legal mechanism by the European Court of Human Rights to evaluate claims to property in the north made by Greek Cypriots, and that it has been “working effectively” since 2005. The IPC has awarded more than €523.7 million in compensation since its creation in 2005. It examines claims for compensation, as well as for restitution – the handing back of Greek Cypriot-owned property in the north – and exchange of land.

The head of the Turkish Cypriot construction workers Cafer Gurcafer said Cyprus is attacking the economy of the occupied north in its decision to keep businessman Simon Mistriel Aykut in custody. He called on the north’s ‘government’ to take action.

In the letters section of the Cyprus Mail it was reported that a group of foreign businessmen ( with the Mediterranean Association for Democracy & Commerce) with significant interests in Cyprus has sent a letter to Justice Minister Marios Hartsiotis. Following the arrest of Simon Aykut, the forum of over 100 businesspeople, has expressed their grave concerns about the current legal and political climate in the country, highlighting the potential negative impact on the business environment and investment climate in Cyprus.

European Commissioner for Internal Market Thierry Breton met last Friday with Energy Minister George Papanastasiou, who briefed him on the strategy and actions of the ministry regarding Cyprus’ double transition – energy and digital.

The minister outlined the three main pillars of Cyprus’ energy policy, which aim to address climate change and cut the cost of energy for households and businesses; the import of natural gas, the expansion of the use of renewable energy sources and measures to save energy; and the electrical connection of Greece and Israel.

Philenews reported that Giorgos Chrysochos, managing director of PEC (Power Energy Cyprus), which is building a large conventional 260 megawatt electrical power plant in Vassiliko, said that his company has proposed to the state to allow it to make technical modifications to its generators so that it can produce electricity from diesel rather than natural gas as is their factory specification.

He noted that there is no need for any new electricity plant or generators in Dekelia to cover the electricity sufficiency in the coming years.

Politis reported that before the end of the year, a detection and deterrence system for all types of commercial drones and UAVs is expected to be installed in five important infrastructures: the Presidential Palace, the Police Headquarters, the Central Prisons and the airports of Larnaca and Paphos. The system will be installed by a Greek company at a cost of 2.1 million euros. 

A new system for deactivating mobile phones inside the Central Prisons is also in the pipeline scheduled to be installed by the end 2025.

The opening of a local office of the European Investment Bank (EIB) will bring significant benefits for Cyprus, the finance ministry said, adding that Minister Makis Keravnos has proposed that EIB staff be accommodated in the building of the ministry, until the bank secures a permanent office

Philenews reported that Cyprus remains attractive for Greek business, due to the country’s comparative tax advantages and stability, and acquisitions and mergers are returning after a long period of stagnation. Recent examples are Greek Eurobank, that is now one of biggest shareholder of Hellenic bank and the purchase by Sklavenitis Group of Papantoniou supermarkets.

How the EU could support Cyprus’ defence industry was discussed last Friday in Nicosia between President Nikos Christodoulides and European Commissioner for Internal Market Thierry Breton.

Media reported that the Finance Ministry has been spurned into action by the news reported by Bloomberg that AB CarVal Investors and Caius Capital are interested in selling their shares in the Bank of Cyprus, which together amount to 14.65 per cent of the bank’s equity. A Finance Ministry official told the Cyprus News Agency that the ministry is closely monitoring how the situation unfolds.

“We will not accept the Bank of Cyprus being sold to an entity of Greek interests,” the official told the agency. Greek lender Alpha Bank which was mentioned in the original Bloomberg report, has denied any involvement but left the door open.

The control of Hellenic Bank, Cyprus’ second-largest bank, has already passed to Greece’s Eurobank.

Philenews with the title “ Investors are leaving Limassol and turning towards Larnaca” reported that the first five months of 2024 showed for the first time after many years a decrease in the number of real estate sales in Limassol and the main reason is less demand from foreign investors who seem to choose other, more economically advantageous cities. According to the Association of Real Estate Appraisers, the main reason for the decrease in sales in Limassol is less demand due to the war in Israel and the fact that interest rates are high. But, Limassol remains in first place in terms of sales, followed by Paphos. Sales in Larnaca and Nicosia are showing an increase, with Larnaca attracting Israelis as it is a cheaper option. The decrease in sales in the first five months of 2024, reached 7% for Limassol, in contrast to Larnaca, which records an increase of 15% and Nicosia, which jumped by 40%.

Significant increases were seen in the price of fresh meat, seafood, vegetables, oil and eggs during the month of May compared with April, the latest price observatory report. The price of seafood rose 23.1, fresh meat was up 7.9 per cent and vegetables by 3.5 per cent.

20/06/24

Philenews reported that Simon Mistriel Aykoot, who was arrested on June 7^th on suspicion of usurping Greek Cypriot property in the occupied territories, is facing a total of 124 charges.

The court will decide today if he will remain in custody.

Police investigators have secured evidence from the Israeli authorities, following a request for assistance.

Philenews reported that according to Greek energypress.gr, Greek electricity experts believe that the Cypriot Government fears the possibility that electricity consumers in Cyprus will eventually be charged with 80% or more of the cost of the construction of the electricity cable connecting Cyprus-Crete. According to the publication, if the Cypriot Government insists on “putting” 100 million euros into the project in the form of its participation in the share capital (instead of sponsorship), then the regulatory decision on cross-border cost sharing between consumers in Cyprus and Greece must be changed i.e. 80%-20% at the expense of Cypriot consumers, from 63%-37% that is now the case. This is due to the fact that this percentage was decided when the electrical interconnection of Cyprus included the electrical interconnection of Crete – Attica but now things have changed as the Crete-Attica interconnection is already close to the implementation phase.

Philenews notes that the current position of the Cypriot Government is that it is not pushing for an amendment of 63% – 37%. Also, it does not want to “donate” to ADMIE and the interconnection the 100 million euros that will be borrowed from the European Recovery Fund in the form of sponsorship. Tt will not provide “free” money, but will give money to get a substantial stake in the Great Sea Interconnector, so as to have a role and a say in the big project. But there is an investment risk (although experts believe it’s not big) and this is of great concern to the Cypriot Ministry of Finance.

The government extended its anti-inflation package for four months, aiming to ease the burden of rising prices on households and businesses.

The extended measures include a tiered subsidy on electricity consumption charges for households, businesses, and industrial consumers (until October 2024 at a cost of €12 million) and a zero VAT rate on basic goods (until September 30, 2024, at a cost of €11 million).

Media reported that the benefit for households is estimated at just 22 euros every two months.

The Republic of Cyprus has drawn offers totalling €6.7 billion from international markets for its newly issued 7-year bond, according to a report released on Wednesday by the Cyprus News Agency (CNA).

issuance has been oversubscribed nearly seven times.

Cyprus is in advanced talks to acquire Sherpa armoured vehicles from French firm Arquus and equip them with anti-tank missiles, according to La Tribune newspaper.

A memorandum of understanding (MoU) with French manufacturers is expected soon, La Tribune reported.

Cyprus is a major consumer of French military equipment, acquiring nearly €310 million worth of systems between 2013-2022.

Cyprus has seen a slight improvement in IMD’s world competitiveness rankings, moving from 45th to 43rd place among 67 evaluated countries. Cyprus’ improvement this year is mainly attributed to a significant enhancement in economic performance, primarily due to increased flows of foreign direct investment (FDI) into the country.

17/06/24

INBNews with the title: “Internationally renowned Tal Catran reveals his secrets at Digital Cyprus” reported that the participation of international cybersecurity expert Tal Catran at the Digital Cyprus event on the 20/06/24 promises to provide important insights and perspectives on the world of cybersecurity. Catran will highlight the modern challenges facing businesses in the digital world and offer valuable advice to protect them from ever-increasing threats.

It notes that Tal Catran is a leading expert with extensive experience in cybersecurity education and the development of national cyber academies & his presence at the conference is a unique opportunity for attendees to learn from one of the top leaders in cybersecurity.

Media reported that according to ADMIE, Important steps in the implementation of the Greece-Cyprus-Israel electrical interconnection, are underway.

In the field of construction, Nexans received the “green” light from the EU Commission for the Granting of Licensing of Marine Research in order to start the seabed surveys. The ship will immediately start mapping the seabed in order to choose the optimal route for the submarine cable that will connect Cyprus to Crete. In the field of financing, it is discussing with the State Fund of the United States (DFC) & financing from Greek commercial banks as well. It is continuing the rounds of contacts with other interested investors, including the Bank of Cyprus. The regulatory framework for the participation of the state fund of Abu Dhabi (TAQA) is also being discussed. 

REACTIONS

The Cyprus Electricity Market Association (comprised of electricity producers & belonging to the Employers’ Federation) has expressed concern for the  Great Sea Interconnector project, noting there is a risk for Cyprus losing its energy sovereignty and characterizing ADIME’s design requirements for the electrical interconnection as disastrous. 

Philenews reported that the Permanent Secretary of the Ministry of Finance confirmed through an interview that the ministry maintains some reservations regarding the electrical interconnection between Cyprus and Crete.

He clarified, however, that these reservations do not directly concern the interconnection, but mainly the participation of the Republic of Cyprus in the share capital of the company as well as the additional costs, beyond 100 million euros, that may be required then the state to pay due to its participation in the project. He added, that the Ministry of Finance also has reservations regarding the technical part of the whole project, a technical analysis of which has not been delivered yet.

It is also waiting for the final cost/benefit study carried out and presented by ADMIE (it showed the possibility of reducing electricity costs by 30%) that will be evaluated by an international consulting firm.

“Any decision taken should ensure the interests of the Republic, Cypriot consumers (individuals and businesses), as well as domestic electricity production.”

Philenews notes that this last point, to safeguard the interests of domestic electricity production, obviously refers to the serious concerns expressed by actors in the energy sector in Cyprus about the possibility that the operation of the cable (after 2030) will lead to inactivity or under-operation of current private investments in RES, but also the conventional units of the Electricity Authority and private producers, for which it is possible that Cypriot consumers will be asked to pay for their maintenance so as to have energy availability (in reserve), in uneconomic/unviable conditions.

The amount invested in Cyprus’ green transition is estimated to reach €3.1 billion by 2030, according to the Finance Ministry.

They said the investment would be sourced from state funds, European Union funds, and private investment, and will go towards helping the country achieve the “high aims” set by the EU regarding climate change.

The President of Republic, Nikos Christodoulides, participated in the International Conference for Peace in Ukraine where he referred to the readiness of the Republic of Cyprus to provide through its fleet the necessary assistance to reinforce efforts to ensure uninterrupted transport of Ukrainian grain.

Cyprus welcomed an upgrade to the economy by ratings agency Standard & Poor’s, who updated long-term ratings to ‘BBB+’ from ‘BBB’.

President Nikos Christodoulides said: “It is the 5th in a row since taking over the governance of the country, and this time concerns Standard and Poor’s, which confirms the positive outlooks of the Cypriot economy.” The credit rating agency said that Cyprus posted the highest consolidated fiscal surplus in the eurozone last year and by 2027 the government debt stock will fall below 60% of GDP, in line with solid growth and fiscal prospects and our expectation that the government will largely meet its budgetary surplus targets.

The Permanent Secretary of the Ministry of Finance said in an interview that Cyprus will seek to receive technical assistance from the EU Commission for the rationalization of the state payroll, which has seen an increase in recent years.

Deputy Minister of Tourism Kostas Koumis confirmed that there have been no flight cancellations to Cyprus due to the recent fires that ravaged parts of the island, which coincided with a searing heatwave.

According to Turkish Cypriot media, foreign nationals (including pensioners) who had bought properties in the occupied territories and resided for years there, are now leaving due to the situation created by the changes to the “residence permit”.

14.6.2024

Simon Mistriel Aykut, the director of Afik Group, a property developer in the occupied north, will remain in custody for an additional six days, as decided by the Nicosia District Court.

He faces charges related to a €1 billion development project in Trikomo on Greek Cypriot property.

Two other individuals are still wanted in the case: Aykut’s sons, 51-year-old Afik Yaacov and 49-year-old Michael Mistriel Aykut.

All three are suspected of five offences: conspiring to commit a felony, conspiring to commit a misdemeanour, fraudulent transactions in real estate property owned by another, unlawful possession, possession and use of land registered to another, and conspiring to commit embezzlement.

Philenews reported that Simon Mistriel Aykut is building settler housing in the Israeli-held West Bank and the Golan Heights. 

The sides involved in the construction of the delayed liquified natural gas (LNG) import terminal at Vasiliko (Chinese CPP & the Natural Gas Infrastructure Company ETYFA) are open to exploring alternative agreements beyond the scope of the current contract, Energy Minister Geroge Papanastasiou said.

“On the one hand, there is a contract that we insist should be honoured by the contracting parties and, on the other hand, there is a willingness of the two parties to reach a different agreement, but this will depend very much on the two parties.”

He explained that the different agreement will see the completion horizon of the terminal, “not necessarily in the context of the specific relationship that comes from the contract, possibly beyond the contract”. This suggests a potential extention of the terminal’s completion timeline.

Regarding the floating unit, Papanastasiou said it is “completed”, adding that there are ongoing consultations for certification.

The statements were made after the House energy committee’s closed-door session that primarily focused on the progress of the LNG import terminal and the Great Sea Interconnector project.

Committee chairman Kyriakos Hadjiyiannis stressed the importance of confidentiality, warning that even a minimal leak could have significant legal implications against the public interest.

A Cypriot (Bulat Akhatovich Yanborisov, a Russian who also holds Cyprus citizenship) and two companies registered in Cyprus have been included in the latest list of sanctions imposed by the US against Russia.

Central Bank of Cyprus governor Christodoulos Patsalides has opposed the imposition of a windfall tax on banks, emphasising that such a tax would harm the economy by disrupting the necessary fiscal predictability needed to attract foreign investors to a small, open economy like Cyprus. He highlighted the need for changes in the governance of the CBC, stating that this institution must undergo a transformation. Addressing the state of the Cypriot economy he made note of its robust growth while regarding interest rates, the gap between lending and deposit rates is moving in the right direction, but at a slow pace.

The European Commission launched the ‘eunite: SME’ project designed to support private sector development in the Turkish Cypriot community and boost Green Line trade. With a budget of €4 million over the next two years, the project aims to strengthen the competitiveness of Turkish Cypriot businesses by supporting their digitalisation, sustainability and compliance with EU standards.

Philenews reported that the zero VAT measure on basic food items expires in June and there is discussion on extending it.

Eurobank purchased an additional 503,934 shares in Hellenic Bank at a total cost of €1.29 million, increasing its stake to 55.42 per cent.

The bills that citizens will receive in the upcoming period concerning various fees are expected to be inflated, and this is not a consequence of the local government reform, the President of the Union of Cyprus Municipalities, Andreas Vyras said.

He explained that the rise in the cost of living allowance (COLA), fuel and material costs have financially stretched municipalities. 

The Audit Office slammed the forestry department for its failure to obtain a sufficient number of firefighting aircraft, which has left Cyprus exposed during its most high-risk fire season. Its announcement came after a big fire in Pafos. 

Cyprus has a specific plan for the procurement of private aerial firefighting means to upgrade and ensure self-reliance, Agriculture Minister Maria Panayiotou said. 

Philenews reported that a new situation is being created for the planned Science Technology Park in Pentakomos, following a recent decision by the Supreme Constitutional Court, opening the way again to find a strategic investor. The Court overturned the decision which had annulled the partial revocation of expropriation of private land for the purpose of creating the Park, due to the state’s financial difficulties.

The demand for loans in Cyprus saw a further decline in the first quarter of 2024, with banks attributing this decrease to high interest rates.

10.6.2024

A back scene column in Politis entitled: “Kition was an April Fool’s lie” notes that unfortunately, Kition Ocean Holdings and the project of the integrated development of the port-marina of Larnaca turned out to be a lie and wonders if the date of official acceptance of the project by Kition (1/4/22) was a coincidence.

Media reported that Israeli property developer Simon Mistriel Aykut was arrested while attempting to cross from the occupied north to the Republic.

Aykut is the founder of the Afik Group, which has carried out various construction projects in Trikomo, many of which are believed to have been carried out on Greek Cypriot land. The Afik Group was in the media a year ago when it was reported that a law firm co-founded by then Cyprus Bar Association chairman Christos Clerides was representing Afik Group chief executive officer Afik Yaacov.

Crown Iris sailed into Larnaca from Haifa on Friday, in the first of an estimated 22 trips till November 2024, up compared to 2023.

The cruise ship, with 1,600 passengers, was welcomed by Larnaca’s municipality, tourist development agency and chamber of commerce and industry.

The chamber thanked Mano Cruises for choosing Larnaca as a port of call.

This is the first large cruise ship to arrive at the port of Larnaca, after the Ports Authority took over its management, following the termination of the contract with Kition Ocean Holdings.

The upgrading of Cyprus’ long-term rating by agency Fitch from BBB to BBB+ is “a vote of confidence in the government”, President Nikos Christodoulides said.

Fitch noted that the update reflects reduced vulnerabilities to financial shocks, resilience to external shocks, and favourable medium-term trends. It is also supported by a strong commitment to fiscal prudence (expected primary surplus of 4.5%, the highest in the eurozone) and a reduction of the non-performing loan ratio to 7.9 per cent. The public debt is expected to fall to 70.6 per cent of GDP.

Cyprus’s inflation rate accelerated in May, reaching a six-month high of 2.7%, driven by rising fuel, electricity, agricultural goods and service costs.

Prices for fresh produce defied government efforts to curb inflation, with vegetables and fruits rising 21.53% and 16.82% respectively in May compared to April.

The increases came despite a zero Value Added Tax (VAT) rate imposed by the Ministry of Finance to shield these categories until June 30.

Philenews reported about general satisfaction prevailing among retailers as regards market

despite difficulty of consumers in terms of their purchasing power.

Two major issues seem to concern retailers. The reduced VAT rate on some basic products, for which they are requesting an extension, and the matter of staff, where great needs are observed.

The number of building permits issued in Cyprus increased by 3.3 per cent year-on-year for the period of January to March 2024.

The government is to buy ten private aircraft with the aim of expanding its firefighting capacity, Agriculture Minister Maria Panayiotou said.

The deputy tourism ministry has introduced the ‘Historic Hotels of Cyprus’ label to showcase and preserve the historical heritage of the country. This initiative aims to enhance the image of Cyprus as a tourist destination and further promote and enrich its tourism product.

7.6.2024

The president of the Cyprus Scientific & Technical Chamber recommends to the State caution and requests a careful evaluation of the final study for the Great Sea Interconnector (and the assumptions made), with the help and experts who will be chosen by the State.

Unusually high temperatures have pushed electricity demand in Cyprus to peak levels, testing the limits of the power grid, the Cyprus Transmission System Operator (DTSO) said.

Peak demand on Wednesday reached 1,017 megawatts (MW) at around 5:00 PM, with conventional generation capacity peaking at 900 MW (available capacity is 942MW due to maintenance at some units) during the evening hours (6:00 PM – 9:30 PM).

While solar photovoltaic (PV) panels contribute significantly to the grid during daylight hours, there is no capacity to store this energy for use later in the day.

Peak PV contribution was around 480 MW at 1:00 PM, dropping to 60 MW by evening peak hours.

Finance Minister Makis Keravnos has criticised the banks for their policy of maximum lending rates and extremely low deposit rates.

“Banks must retake the role of financiers of Cypriot businesses so we can go ahead with everything we have planned; they must make a comparison with what is happening generally in the European banking system, because they cannot continue operating along today’s lines.”

An op-ed in the Cyprus Mail notes that banks would rather deposit its available funds with the ECB and collect 4 or 3.75 per cent interest rate, with zero risk involved, than lend to a business, at a higher rate but with significantly higher risk.

The lack of competition does not help businesses either.

A tender for the leasing of two firefighting helicopters has been scrapped, after none of the bidders met the standards, media reported. four firefighting planes leased by the government from a Spanish company are expected to be back to Cyprus within the month.

Chief Scientist Demetris Skourides recently attended a ceremony at NASA headquarters in Washington DC in order to witness the Cypriot team “Brute Force” receiving the highest accolade at the esteemed NASA Space Apps Challenge.

6.6.2024

The Cyprus chamber of commerce and industry made a fresh call for domestic suppliers to provide products to be sent to Gaza via Cyprus’ Amalthea humanitarian aid corridor.

In relation to the technical, financial and other aspects of the Cyprus-Greece-Israel electrical interconnection, the President and CEO of ADMIE, Manoussos Manousakis, presented the cost/benefit study to the Cyprus Chamber of Commerce & Industry and the Employers’ Federation.

The Federation considers it vital that the final cost-benefit study be evaluated by an independent consultants as well as by state authorities.

Politis reported that the Cypriot government gave ADMIE two weeks to officially submit the cost-benefit study, which will determine the contribution of the Republic of Cyprus with 100 million euros to the project.

The use of energy by EU households in 2022 dropped to its lowest amount since 2016, also significantly dropping compared to 2021, while energy use in Cyprus returned to its 2019 levels.

President of the Larnaca Hoteliers Association Marios Polyviou reported a slight decrease in tourist bookings in Larnaca compared to last year, noting that arrivals to the island are being affected by a range of world events, including the UK general election.

Addressing the ongoing war in Ukraine, Polyviou said that “this conflict has essentially halted the flow of tourist arrivals, particularly from Russia, which about three years ago was one of Cyprus’ main markets”.

Polyviou also mentioned that “the new factor in this year’s tourism season is the impact on the Israeli market, which last year had tremendous momentum and resulted in a significant increase in arrivals to Larnaca, making it perhaps the city’s main market”.

“We hope that a solution to the conflict will be found, ending the daily events in our neighbouring country,” the association president stated.

Asked whether he is optimistic about the remainder of the tourist season in Larnaca, Polyviou said that there are clear challenges on the horizon, such as the aforementioned war in Israel.

“The prolonged economic recession in Europe and the UK, issues in air travel, which have resulted in a reduction in available seats, and rising airfares all seem to be affecting the flow of arrivals,” Polyviou added.

INBnews reported that within the next few weeks, if not days, the official announcements about a big deal in the retail sector in Cyprus are expected.

According to sources cited by the Greek website Euro2day.gr, the negotiations between Sklavenitis Group (Greek owned) and Papantoniou supermarkets, one of the largest retailers in Cyprus, are at an advanced stage.

The occupied north’s ‘prime minister’ Unal Ustel and Turkey’s Vice President Cevdet Yilmaz signed the latest annual financial protocol covering the coming year’s financial provisions from Turkey to the north, with this year’s deal worth 16 billion TL (€452 million).

The cabinet upheld a decision to revoke the citizenship of Malaysian businessman Jho Low who is wanted by Interpol for serious financial crimes.

A grant scheme to boost business activity within British bases territory was approved by cabinet.

29/11/24

ENERGY RELATED NEWS

Philenews with the title: “A new critical test for geopolitical risk is approaching” reported that the surveys of Italian research vessel IEVOLI RELUME (and another one) for the needs of the Cyprus-Greece electrical interconnection are currently being carried out within the territorial waters of the two countries but soon will be carried out in the EEZs of Cyprus and Greece.

The statements last Tuesday by the Turkish Minister of Defense in the Turkish parliament are causing concern in the governments of Cyprus and Greece, as they foreshadow a repetition of incidents similar to those recorded last summer when similar surveys were carried out by an Italian company in the Karpathos-Kassos area. Despite the reassuring statements made from time to time by the Greek Foreign Minister, the Turkish Defense Minister said that the ship of the Italian company authorized by Nexans to carry out the soundings off Kasos and Karpathos was forced to request and receive permission from the Turkish Authorities in order to carry out its work.

DISY MP Kyriakos Hatzigiannis, in a post on X, was critical of the Greek Prime Minister noting his great concerns regarding the questioning of Greek sovereignty by Turkey, especially in relation to the implementation process of the electrical interconnection project.

After a statement by DISY that his positions do not express and do not represent the party, Kyriakos Hatzigiannis retracted what he said, expressing his regret and citing a misinterpretation of his position.

Philenews reported that the most pressing need for electricity consumers and the economy is the adoption of decisions that can create prospects for substantial reductions in electricity charges.

Creating prospects for cheaper electricity requires a reassessment or even a revision of decisions made during the Anastasiades administration, involving the Cyprus Energy Regulatory (CERA) about the current and future structure of the electricity market.

The current government needs to evaluate whether the competitive electricity market, expected to begin in mid-to-late 2025 based on the EU’s Target Model, will indeed foster significant competition within the domestic market and price reductions.

The Minister of Energy has informed members of the Energy Committee that his ministry is examining a new formula for the electricity market’s operation but suspending the Target Model in the Cypriot electricity market is not a decision that only has to overcome the hurdle of EU evaluation. It also needs to overcome the resistance of private investors. It is unclear whether the radical changes being considered will be approved by President Christodoulides.

Petrolina has announced the completion of a €48.6 million deal to acquire ExxonMobil Cyprus.

According to the announcement, this includes the company’s 68 Esso-branded service stations, marking a significant expansion of its operations in the Cypriot market.

ExxonMobil Cyprus Limited (EMCL), a subsidiary of Exxon Mobil Corporation is operating locally since 1955, supplying and distributing fuels through its stations.

In 2023, EMCL reported a turnover of €272.4 million and a net profit of €2.7 million.

ECONOMIC NEWS

A new tender is to be opened for the operation and maintenance of the Larnaca marina, Transport Minister Alexis Vafeades said.

The winner of the tender would gain the right to operate and maintain the marina for a period of five years, or until the process of finding a new investor to upgrade the marina’s infrastructure is completed.

The transport ministry will continue operating the marina and carrying out necessary maintenance works until either December 31, 2025, or the date on which a private operator is found.

The same rights will be given to the ports authority to continue to operate Larnaca’s port, subject to the holding of a separate tender for its operation and maintenance.

The port and marina would now be treated as two separate projects, subject to two separate tenders. 

Hellenic Bank announced that the Commission for the Protection of Competition has approved its acquisition of CNP Cyprus Insurance Holdings.

Upon completion, Hellenic Bank is projected to secure a dominant position in the Cypriot insurance market, commanding an estimated market share of 30 per cent in life insurance and approximately 23 per cent in general insurance.

Politis reported that the award of the tender to Unicars (Volkswagen agents) for the purchase of 25 electric saloon-type vehicles for ministers, deputy ministers and other state officials was annulled by a decision of the Tender Review Authority last September.

There was a competitor’s complaint that the model chosen did not meet the tender specifications.

Following this development the Ministry of Transport recently awarded the tender to the second bidder.

28/11/24

ENERGY RELATED NEWS

There is “clear support from the United States” for the Great Sea Interconnector, Greek Energy Minister Theodoros Skylakakis said,speaking at an intergovernmental summit between Greece and Cyprus, adding that his country is now at the “epicentre of various interconnections”.

Greece has already connected its mainland grid with Albania, Bulgaria, Italy, North Macedonia and Turkey. The interconnector cable connecting Crete to the mainland is nearing completion, while interconnection projects in the Cyclades islands and the Dodecanese islands are ongoing. 

Skylakakis said the project will be “more beneficial for the Cypriot consumer, as for Greece, it will contribute more to the stability of the system and the possibility of dispersing renewable energy potential into the wider region”.

“The project is important politically, geopolitically, and in terms of energy for Cyprus and the wider region,”.

He added his hope that with the Cypriot government set to become a stakeholder in the project, it will “be able to attract the interest of important international investors”.

Minister of Energy George Papanastasiou acknowledged the “technical, geopolitical, and financial risks” of the project, but said the geopolitical risks can be “managed through diplomacy, operational monitoring, and financial alliances with investors from major countries”.

Philenews reported that although the regulatory authorities of Cyprus and Greece had jointly taken and signed in September the decision not to approve the recovery by the project implementor ADMIE of 36 million euros (out of the 48.8 million it claimed against the purchase of the electricity interconnection project from EuroAsia) the Greek Authority is reportedly ready to unilaterally approve ADMIE to recover the entire 48.8 million.

Information from Greece indicates that, given CERA’s refusal to succumb to ADMIE’s pressure and agree to the concession of the entire amount, the Greek regulator  intends to review the issue in the next one or two days, with the intention of approving the request of the implementing body. People in the know in Cyprus estimate that such a differentiation would be surprising, as the decisions so far on the regulatory framework and CBCA (cross-border cost sharing) were taken jointly. And if this proceeds the cost will probably be borne entirely by consumers in Greece, unless CERA’s position changes.

Although Greek publications continue to blame the Cypriot side for the delays in promoting the interconnection, sources in Cyprus believe that what makes ADMIE uncomfortable and criticize CERA is the refusal of the Cypriot Government to make a decision to purchase shares in the Great Sea Interconnector before the due diligence study by an American firm is completed and before other evaluations of the project’s financial data are completed.

Without the participation of Cyprus, ADMIE believes that it will be difficult to secure other investment interest and will have to be content with the loans promised to it by Greek and foreign financiers, with high interest rates. Things may become even more difficult if the European Investment Bank (EIB) does not approve the low-interest loan of 500 million euros soon.

An article published by newmoney.gr states that ADMIE has already appealed to the Council of State (Council of State) of Greece and the competent court of Cyprus, requesting that the CBCA (Cross Border Cost Allocation) be amended, so as it does not have to pay compensation in case the project is abandoned due to its fault.

ECONOMIC NEWS

According to President Christodoulides, Cyprus is expected to record the third highest growth rate in the Eurozone with 3.8 per cent for 2024, while unemployment (5.2%), inflation (2%) and public debt (69% of GDP) continue their downward trend.

the fiscal surplus was expected to reach 3.9 per cent for 2024

He was addressing the second Cyprus-Greece business forum in Nicosia with Greek Prime Minister Kyriakos Mitsotakis.

Cyprus, he said, aspired to become  one of the best places in the world for someone to live, work and be active and to achieve this fiscal responsibility, a stable and robust financial environment and bold reforms are needed from the State.

The Paphos Court has dismissed a request by the contractor to disallow government officials access to the Paphos Polis road construction site.

The court also overturned an appeal by the contractor, Intrakat, which sought to prohibit the liquidation of a €6,791,000 advance payment by the government.

Through a separate case, the government has ensured that the company does not remove any equipment from the site. A counter case by Intrakat seeking to ban the government from the site was overturned by the court.

Transport Minister Alexis Vafeades earlier this month promised the completed highway connecting Paphos and Polis Chrysochous will be ready within the next three years despite the contract for the first phase of its construction being torn up by the government.

The tender will be outsourced to a different contractor, however, the court ruled that until the case has been completed, the government cannot continue with phase one of the project – from Paphos to Stroumbi.

Direct connections between Cyprus and India are possible, Deputy Minister of Tourism, Costas Koumis said.

He also revealed ongoing discussions for direct flights with China and the USA.

Philenews reported that investment funds have become a cornerstone of Cyprus’s new business model.

In recent years, coordinated efforts by relevant authorities have resulted in significant contributions to the Cypriot economy, with investments flowing into crucial sectors.

Investment funds represent a collective investment process where multiple investors pool their capital to benefit from collective advantages, including risk reduction, professional fund management, and lower transaction costs.

And Cyprus has emerged as an ideal jurisdiction for establishing and managing Investment Funds.

A group of shopkeepers in central Nicosia has called for a reassessment of traffic regulations on Archbishop Makarios III Avenue, seeking to improve vehicle accessibility to the pedestrianised section of the street.

27/11/24

All necessary measures to ensure the safety of Vasiliko energy centre are being promoted, Energy Minister George Papanastasiou said.

He was addressing an event to mark the 10th anniversary of VTTI Cyprus adding that the Ministry is in the process of developing the administration framework of the centre.

Papanastasiou said that the VTTI terminal at Vasiliko has placed Cyprus on the energy map.

The collaboration between Cyta, the project contractor, and the Electricity Authority of Cyprus (EAC) is proceeding smoothly for the implementation of 400,000 smart meters across the electricity network.

According to Philenews sources, the first batch of 30,000 smart meters is expected to arrive in December, with installation scheduled to begin in January 2025.

The smart meters are manufactured by Swiss company Landis+Gyr.

The total project cost amounts to €50 million, with €35 million funded through the Recovery and Resilience Facility, whilst EAC will cover the €10 million installation costs from its cash reserves.

Sergey Lomakin, owner of Paphos FC, is among 77 foreign investors whose Cypriot citizenship, obtained through the controversial “golden passport” scheme, has been revoked by the Council of Ministers.

The revocation comes as part of a government crackdown on abuses within the naturalization program, which allowed wealthy investors to gain Cypriot citizenship in exchange for significant financial investments. The list of individuals losing their citizenship includes Russian multimillionaires and internationally wanted individuals, such as Malaysian financier Jho Low, implicated in global fraud cases.

Labour Minister Yiannis Panayiotou appealed to both sides to end the cement workers strike that has entered its fourth week without resolution.

The strike has brought the construction industry to a standstill.

State doctors have begun a 48-hour strike, as disagreements persist between healthcare workers and the State Health Services Organisation over the timing of pay negotiations.

The average annual salary for a public doctor ranges from €150,000 to €160,000, with some earning over €200,000 or €250,000 annually.

President Nikos Christodoulides said that the projects digital citizen and the rebranding of Cyprus (which are underway) will modernise the state and assist in attracting investments for the benefit of the economy and society in general.

According to a report by Kathimerini, Cyprus is experiencing a surge in foreign investment, with approximately 200 international companies establishing operations in the country during the first half of the year. These investments have created 1,200 new jobs across various sectors, highlighting Cyprus as an attractive destination for global businesses. Notably, companies from outside the European Union are increasingly using Cyprus as a gateway to Europe, reinforcing its status as a regional hub. Foreign investment in Cyprus reached €3.2 billion in 2023, creating 2,500 jobs.

Cyprus topped European Union rankings for household investment rates in 2023, highlighting growing economic disparities among households, including many new residents from EU member states and third countries who relocated following Russia’s invasion of Ukraine.

According to new Eurostat data, Cyprus recorded a 14.6% household investment rate in 2023, primarily in housing purchases and renovations.

The eurozone average was 9.5%, while the EU-27 average stood at 9.8%.

The high investment rate comes despite multiple crises since 2020-21, including inflationary pressures, that have pushed many citizens toward poverty thresholds.

25/11/24

ENERGY RELATED NEWS

ExxonMobil, in partnership with Qatar Energy, is planning to drill two more wells in Cyprus’ offshore Blocks 5 and 10 early next year. The announcement came after a meeting between ExxonMobil Vice President John Ardill and Cyprus’ President Nikos Christodoulides, alongside Energy Minister George Papanastasiou. Ardill said the goal is to support Cyprus’ domestic gas supply and potentially liquefied natural gas (LNG) production. The two new wells are expected to be drilled in January, with one in Block 5, called the “Electra” drilling, and another near the “Glaucus” field in Block 10, called the “Pegasus” drilling. Energy Minister Papanastasiou explained that if successful, the “Glaucus” and “Pegasus” fields might be developed together using shared infrastructure. Additionally, there are talks about potential synergies between existing gas fields, like “Cronos” and “Glaucus,” and new developments. Papanastasiou clarified that the President’s comments about Gulf companies referred to possible new rounds of licensing, not to existing projects.

Energy Minister George Papanastasiou, talking at the Economist conference, appeared confident that Cyprus can become the European Union’s “energy arm” in the region. Regarding the Aphrodite reservoir in Block 12, the minister said the government has had “very productive” talks with the concession’s operator. A final development plan is expected by January 2025.

Matthew Bryza, former US Deputy Assistant Secretary of State for European and Eurasian Affairs who was a speaker at the Economist conference noted that current gas discoveries offshore Cyprus are not yet sufficient for exports. He also called the Great Sea Interconnector “an extremely challenging project” financially that will require heavy subsidisation.

Philenews reported that all stakeholders involved in the Great Interconnector Project – particularly Greece’s power grid operator and the Cypriot government – expected that the European Investment Bank’s (EIB) decision on a €500 million loan would be clarified during meetings with the bank’s president, Nadia Calviño, in Greece yesterday and Cyprus last week. However, according to Greek media reports, Calviño will not announce approval of ADMIE’s request for the loan.

Energypress.gr reported that the loan approval could take several more months. A key prerequisite is the submission and European Commission approval of both countries’ National Energy and Climate Plans (NECPs).

After approval of both NECPs, the EIB will proceed with further procedures, (correspondence regarding the project’s cost-benefit analysis etc.)

If the EIB decision is indeed delayed by several months, questions arise about the Cypriot government’s position on the crucial matter of whether to participate in the Great Sea Interconnector’s investment capital.

The key question remains whether the Council of Ministers will make this critical decision without the EIB’s stance.

ECONOMIC NEWS

President Nicos Christodoulides said he is proud of the upgrade by Moody’s, and expects the development to attract quality foreign investment and generate new jobs. Moody’s has given the Republic of Cyprus a two-notch upgrade in its credit rating, raising it from Baa2 to A3, and has changed its outlook to “stable”. Cyprus now finds itself in the “A” investment category for the first time since July 2011, when a financial crisis brought it to the brink of bankruptcy and was followed by bailouts from the European Union and the International Monetary Fund. The Cyprus Ministry of Finance said the two-notch upgrade reflects a substantial improvement in the country’s fiscal metrics and public debt, which it expects to remain stable. According to Moody’s, Cyprus has significantly reduced its public debt ratio from the high levels it had reached in 2020, ranking it among the countries with the largest debt reduction in the world.

Central Bank of Cyprus (CBC) govennor Christodoulos Patsalides addressed the Economist annual summit last week highlighting the European banking sector’s resilience, while also addressing the challenges and risks facing the region’s economy. While growth in the euro-area has been slow, the ECB must approach rate cuts carefully, he noted. He also mentioned that “there is still considerable uncertainty with regard to energy prices, and services inflation continues to be sticky at 4 per cent”. Europe, he added, will suffer in the event of a new trade war with the United States and could face a recession combined with high inflation.

The Minister of transport predicted that the cost of the first phase of the Paphos-Polios road (the project was terminated recently due to disagreements with the contractor and a new tender will be announced) will skyrocket from €70 million to €90 million. This is due to inflation in recent years. But this extra cost will be claimed from the previous contractor who is also seeking millions from the State. Kathimerini reported that the government is stepping up efforts to strengthen the framework for public works contracts, following the cancellation of the Paphos–Polis road project. The Public Procurement Authority is introducing new conditions for public works tenders to minimize the time required to find a new contractor.

Odysseas Michaelides (the former Auditor General who was dismissed) in a letter published by Philenews, is very critical as regards public projects, pointing out that lack of transparency and political entanglement have created an oligopoly in the public works sector. The Larnaca Port project foundered because the contractor (who had hoped to cover the cost of the construction projects by selling luxury apartments) realized that his business plan was not working and preferred to abandon the project. The situation on the Paphos-Polis road is somewhat similar.  Other projects such as Vasiliko appear to have failed due to the contractor’s inability to meet its contractual obligations. In most cases, the Government hesitated to take measures and there was mismanagement. As long as citizens show tolerance for the phenomena of collusion, impunity and amateurism, this will continue, with worse results each time.

Cyprus has “no room for growth” in terms of its summer tourism figures, Tourism Deputy Minister Costas Koumis said adding that tourism figures are set to hit a record high this year. Tourism’s contribution to Cyprus’ gross domestic product grow from 10.9 per cent last year to an estimated 13.5 per cent in 2024.

Cyprus’s property market showed mixed performance in the third quarter of 2024, with apartments demonstrating resilience while other sectors declined, according to the latest Ask Wire Index. Apartments recorded annual increases in both sale prices (+1.2%) and rental rates (+1.9%), indicating strong demand. In contrast, houses saw decreases in both sales and rental prices (-0.8%), the property technology firm’s data shows.

Cyprus has received a total of €126 million net in funds from the EU for 2023 and is set to gain much more by 2027, Cypriot member of the European Court of Auditors (ECA) Lefteris Christoforou said on Thursday. Presenting the ECA’s annual report for fiscal year 2023 to the House foreign, finance and audit committees, Christoforou said Cyprus had fully utilised available EU funds, from which it had received a total of €750 million which was 100 per cent of its eligibility.

The defence ministry aims at reaching 2 per cent in military expenditure by 2028, according to Defence Minister Vasilis Palmas. The Ministry’s budget for 2025 provides for total expenditure of €588.4 million, of which €180 million is for defence. 

Kostas Kythreotis, president of the ready-mix concrete manufacturers association, called for a three-month suspension of strike action to allow negotiations. Trade unions called on workers to continue.

The Health Minister Michael Damianos rejected demands for increased doctors’ pay, warning that additional funding would burden taxpayers through the state health services organisation. Doctors already received 16 million euros in horizontal incentives for 2023. An independent study recommended an additional 2.5 million euros, but doctors rejected this figure and announced a 48-hour strike.

20/11/24

A small number of Cypriot passport holders were listed on the UK’s financial sanctions list, including one businessman allegedly linked to Roman Abramovich, former owner of Chelsea football club.

The list includes 13 individuals who are Cypriot nationals or hold a Cypriot passport. Only two are Cypriot-born, the rest are dual nationals – Russians with a Cypriot passport.

The former president of DISY party Averof Neofytou warned that the strike in the concrete sector could have dire consequences for the construction sector and tourism.

The first mobile desalination units will be ready in October 2025, the water development department said.

Cyprus ranks first among EU member states in utilising European funds. It has absorbed €745 billion from the previous financial framework and is currently 35% above the EU average in the new framework across multiple funds, including Cohesion Policy, Regional Development, Social Fund, Cohesion Fund and Youth Employment. The country has received €263 million from the Recovery and Resilience Facility to date, representing 21% of its total allocation. 

The second, third and fourth instalments totalling approximately €230 million have been submitted, with a fifth payment expected by year-end.

18.11.2024

ISRAEL RELATED NEWS

The Cyprus News Agency (and published by Politis & Kathimerini) reported that according to Israel’s Ambassador to Cyprus Oren Anolik, who spoke during the 12th Energy Symposium, the cooperation between Israel, Cyprus and Greece has never been more important. He also said that Cyprus and Israel are working together to create a strong, sustainable and interconnected energy future. He also noted the resilience of Israel’s energy infrastructure, the opportunities for expanded partnerships with Cyprus, the aim to interconnect the electrical networks of the three countries, the possibilities for deeper cooperation in renewable energy sources and innovative technologies. Concluding he added that working together, a more resilient, interconnected and sustainable energy future for the entire region can be created. 

The Center for Jewish Impact and the Cypriot Embassy in Israel co-hosted an event entitled “Innovating Tomorrow Together: Enhancing Cyprus-Israel Collaboration in Research and Innovation,”. Over 50 leaders from govt, diplomacy, multinationals, academia as well as the Chief Scientists of both countries participated. 

ENERGY RELATED NEWS

During the 12th Energy Symposium President Christodoulides revealed there is interest from Gulf energy companies in Cyprus’s Exclusive Economic Zone (EEZ) blocks (media reported of interest from Abu Dhabi National Oil Co. and BP – the Minister of Energy also stated that these blocks may be either unlicensed ones or blocks where the operators might wish to give up their license). The president referred to intensive progress on the development of the “Aphrodite” gas field, with developments expected in January. He also mentioned plans for developing the “Kronos” field, following his recent telephone conversation with ENI CEO Claudio Descalzi. (The Minister of Energy also said that he expects the gas field operated by Eni and TotalEnergies to be the first to come into production, around 2027, while the field operated by Chevron is expected to enter production in 2029 or 2030).

Regarding the Cyprus-Crete electrical interconnection project, the President said that decisions about share capital participation by Cyprus are expected end of the year. Discussions are ongoing with Greece, France, and the United Arab Emirates to establish a joint company for project participation. He added that during his recent meeting with the US President, they discussed interest from American investment funds in the project.

Energy Minister Giorgos Papanastasiou said that ETYFA (Natural Gas Infrastructure Company) is in consultation with two non-European states, in order to agree on the transfer of the Prometheus FSRU to a shipyard. One country is in the Mediterranean.

 At the shipyard, Prometheus will undergo the final conversions, in order to be certified. According to the minister, the most likely thing is that Prometheus will be used (it will be rented as an FSRU) in the country where the final work will be done. With the completion of the works at the Vasiliko terminal, Prometheus will come to Cyprus to start gasification for a period of around 20 years.

During the 12 Energy Sympsium, Energy Minister George Papanastasiou said that the aim is for Cyprus to become an export hub for liquefied natural gas, which will come from the deposits of the Eastern Mediterranean. This can be achieved through a floating unit, the FLNG, or with a natural gas liquefaction terminal on land. The primary objective of the government is to reduce the cost of electricity in Cyprus.

Papanastasiou said that in mid-January 2025 the first applications from commercial producers and individuals for energy storage will be submitted with the aim of storing 150 Megawatts of electricity from Renewable Energy Sources (RES), and he announced that the electricity market will open in July 2025. The Minister also specified that electrical interconnections are part of the overall strategy of the Government and added that the Israel-Cyprus-Crete electrical interconnection project is expected to be completed at the end of 2029.

According to Philenews, Polyvios Lemonaris is the technocrat who was chosen by the Council of Ministers for the position of president of the Cyprus Energy Regulatory Authority.

He is a shipping – mechanical engineer and was a member of the board of directors of Electricity Authority (EAC) during the previous government. From this position he had represented EAC (retains 30% of the share capital) in the board of directors of the Natural Gas Infrastructure Company (ETYFA), during the execution of the contract for the terminal in Vassiliko. In December 2023 he was appointed head of the Energy Group of DIKO.

There will be consultation with the Energy Committee of Parliament before finalizing the appointment. He is considered modest & knowledgeable and the appointment signals the intention to promote substantial changes in the framework of the operation of the electricity system and to strengthen the role of the Government in formulating an energy strategy, with the parallel goal of diversifying the electricity pricing process for all consumers.

The cabinet approved the first state subsidy scheme for energy storage systems at existing renewable energy parks and net billing installations.

Energy Minister George Papanastasiou said that the scheme’s first phase, worth 35 million euros in subsidies, would be implemented initially, followed by a second phase with an additional 5 million euros.

ECONOMIC NEWS

The European Commission expects growth in Cyprus to remain robust in 2025 and 2026, according to the Autumn 2024 Economic Forecast.

The Commission expects annual growth in Cyprus to be at 3.6 per cent for 2024, and growth to continue by 2.8 per cent and 2.5 per cent over the next two years.

Inflation is expected to decelerate from 2.2 per cent this year to 2.1 per cent and 2.0 per cent in 2025 and 2026. Unemployment is also expected to drop from 4.9 per cent this year to 4.7 per cent in 2025 and 4.5 per cent in 2026.

Also, the Commission assesses the implementation challenges of some large investment projects as one of the main risks to the country’s fiscal outlook, since these projects may burden public budget through called guarantees and other claims.

Cyprus recorded the highest GDP growth in the eurozone at 3.8% year-on-year in the third quarter of 2024, significantly outpacing the bloc’s average of 0.9%.

The growth was driven by five key sectors: hotels and restaurants, wholesale and retail trade, vehicle repair, information and communications, and construction.

Property prices in Limassol surged in 2024, with apartment prices up by over 20 per cent and house prices rising by 30 per cent, according to a report from Landbank Analytics. There was a decrease in average sale prices in Nicosia, despite a rise in the number of new residential sales this year. Meanwhile, the Central Bank  forecasts a shift in property market dynamics, with demand, supply and prices expected to moderate following a period of continuous growth. Reduced demand from foreign buyers and high mortgage rates suppressing domestic purchases are easing the upward pressure on property prices seen in previous quarters while falling construction material costs, combined with increased building activity and more residential units entering the market, are also contributing to containing upward price pressures.

Cyprus recorded its highest-ever tourist arrivals for the January-September period, with visitors reaching 3,268,090, up 4.2% from the same period last year.

The United Kingdom remained the largest source market with a 34.5% share, showing a 4.9% year-on-year increase. Israel followed with 11% market share, despite a 2.5% decline from 2023, while Poland secured 8.2% of arrivals with a significant 26% growth.

Tourism revenues reached 2.12 billion euros in the first eight months of 2024.

Average per capita spending increased slightly to 769 euros.

The average length of stay remained stable at 8.56 days.

The cabinet approved a comprehensive action plan to combat drought and water scarcity.

The programme includes 28 actions – seven immediate, eight medium-term, and 13 long-term measures – aimed at strengthening water security and infrastructure across the island.

It complements a national water infrastructure investment plan worth over 1 billion euros approved in April 2024.

The immediate and medium-term actions, targeted for 2025-2026, are expected to boost the water balance by more than 15 million cubic metres annually, representing 15% of the total water supplied for domestic use.

Key immediate measures include utilisation of four boreholes for irrigation, installation of mobile desalination units at four locations, increased production from the Dhekelia desalination plant, network loss reduction initiatives.

Medium-term actions through 2026 include water network upgrades with smart meters, promotion of private desalination for agriculture and hotels & installation of an integrated monitoring system worth 7 million euros.

Long-term measures through 2030 include expanding five existing permanent desalination plants by up to 50% and constructing two additional plants, with renewable energy integration planned for all facilities.

The former president of DISY party Averof Neofytou has strongly criticized President Christodoulides for the recent suspension of contracts for critical infrastructure works. 

For the Larnaca port/ marina project he said it will be very difficult to find another strategic investor willing to build the project as planned – that is, a commercial port together with a passenger port for large cruise ships and at the same time, the largest marina in Cyprus.

The President of Invest Cyprus, Evgenios Evgeniou said that in 2023 foreign investments reached 3.2 billion euro, while 2,500 new jobs were created. An ecosystem of 800 technology companies has been created in Cyprus, which contribute significantly to the economy of the country.

The cabinet approved an additional €109 million in spending for the finance ministry for fiscal year 2024, with Finance Minister Makis Keravnos saying the overall budget would remain balanced despite these funds

.

The European Commission has initiated two new procedures against Cyprus regarding water management and the submission of updated national energy and climate plans.

The Commission issued a formal notice to Cyprus as part of its regular package of infringement decisions. This letter requests further information from Cyprus, which must respond with a detailed reply. If the Commission finds that Cyprus is failing to meet its obligations under EU law, it may issue a reasoned opinion.

Should Cyprus still not comply, the Commission could refer the matter to the Court of Justice, potentially leading to penalties.

Cyprus is one of nine European Union member states which is set to acquire French Mistral surface-to-air missiles as part of the bloc’s first ever financial support package for common defence procurement.

The missiles will be acquired as part of the European defence industry reinforcement through common procurement instrument (Edirpa), which has allocated a total of €300 million worth of funding to five separate defence projects.

Politis reported that within 2025, a new interbank direct payment platform is expected to be operational, through which transactions will be carried out using a mobile phone number.

Philenews reported that Cypriot banks are recalibrating their business strategies to sustain profitability as the era of high interest rates appears to be winding down.

Bank of Cyprus and Hellenic Bank posted a combined profit of €685 million for the first nine months of 2024 (€401 million and €284 million, respectively) and these profits were largely driven by robust net interest income, improved portfolio quality, and strong liquidity positions.

Banks will now focus on diversifying income streams, controlling operational costs and expanding lending activities.

14/11/24

ENERGY RELATED NEWS

The floating storage and regasification unit (FSRU) Prometheas, which will form part of the liquefied natural gas (LNG) project will set sail for Cyprus from Shanghai at the beginning of December, Energy Minister George Papanastasiou said.

It will take between 20 and 45 days to arrive as it will first have to go to a port somewhere on the way from Shanghai to Cyprus to be officially certified for its use as an FSRU. The ministry has not yet decided on where the certification process will be carried out.

The FSRU is one of a number of moving parts in the project, with public natural gas infrastructure company Etyfa set to select a new project manager for the project’s onshore infrastructure in the coming weeks.

The project manager will then assist Etyfa in drafting tender documents for the contracts for the remaining works at Vasiliko, which are to be re-tendered after the Chinese consortium had in July terminated its contract with Etyfa to build the whole LNG terminal.

ECONOMIC NEWS

Transport Minister Alexis Vafeades defended the government’s actions in terminating the Paphos-Polis road contract and responded to criticism from construction company Aktor (formerly Intrakat) that is now seeking over €35 million in damages through the courts.

The termination is attributed to “significant and unjustified delays on the part of the contractor”.

The termination of the Paphos-Polis road construction contract has prompted reactions from both Disy and Akel parties.

Disy, raised broader concerns about the collapse of large development projects in the country, citing the need for better oversight and management to avoid such contract failures.

It called for an immediate review of the public contracting process and parliamentary discussions to limit misuse of appeals, which they believe has contributed to the disruptions.

Akel’s statement focused mostly on the Paphos-Polis road project, attributing blame to former President Nicos Anastasiades and his administration, and to President Nikos Christodoulides.

Akel highlighted this contract’s failure as part of a series of halted or cancelled projects, including the Vasiliko natural gas terminal and the Larnaca port and marina redevelopment.

The contractor of Liopetri fish shelter and river development project threatened legal action against the government after the interior ministry announced it was terminating the project after 22 months of extensions. 

The Parliamentary agriculture committee members have urged the Town Planning Department to reverse its decision to terminate contracts with both the engineer and contractor of the Liopetri River project, amid growing concerns over further delays to the development.

The House legal committee called for improvements to the procedural framework surrounding public contracts, amid a wave of contracts being terminated by the government in the second half of this year.

The accountant-general’s office had submitted a list of suggested amendments to the committee, which would see changes to the approval process and other aspects of the laws regarding public contracts.

One suggested change was the appointment of an official belonging to another contract authority as a “contract coordinator”, while other changes included stipulations regarding on-site inspections of the projects being carried out, and a codification of the framework regarding contract termination.

Labour Minister Yiannis Panayiotou praised both workers and employers in the concrete sector for agreeing to the negotiation framework he has devised with the aim of bringing to an end the strikes which have been taking place in the industry over the last week.

The Boards of Directors of Bank of Cyprus have extended the appointment of Panikos Nikolaos as the Group’s CEO until December 31, 2028.

13/11/24

ENERGY RELATED NEWS

The energy regulator said it will review data purporting to show how the Electricity Authority of Cyprus (EAC) could “trim the fat” and cut costs by up to 15 per cent.

The EAC’s “fat” has become a buzzword after Michalis Persianis, head of the Fiscal Council, introduced the term.

Persianis clarified what he meant by this “fat”. He is referring to two expense items for the EAC – the purchase of fuel and of greenhouse gas emissions allowances.

According to his calculations, these two expenses come to approximately €800 million for 2024.

Persianis said the EAC’s longtime policy has been to shield itself from major fluctuations from these expenses by simply passing on the cost to its customers via utility bills.

“For us, this is unacceptable,” he said.

Persianis cited various strategies the EAC could adopt to lower its costs for either fuel or the EU Emissions Trading System (ETS). These include trading in derivatives, such as put options, futures contracts or swaps.

The EAC’s board chairman recently admitted that the organisation lacks the know-how to engage in these practices.

The energy regulatory authority has asked the Fiscal Council to send them the calculations of how the EAC could save on costs.

ECONOMIC NEWS

Another divorce with a contractor for a public development project was formalized by the Ministry of the Interior announcing its decision to terminate the employment of the engineer and the contractor of the project “Reformation of the Fishing Shelter and the River in Liopetri”. This is a project which, like the one for the Paphos road, is already experiencing significant delays. The fate of the project will be judged by the Ministry of the Interior, which is examining its options to find the most suitable alternative, feasible solution for the continuation and completion of the Project.

Transport Minister Alexis Vafeades that the highway connecting Paphos and Polis Chrysochous will be ready within the next three years, after the contract with the previous contractor was suspended due to delays.

Aktor (formerly Intrakat) is now seeking over €35 million in damages through the courts . “We are compelled to pursue our legal rights in Cyprus and, if necessary, in Europe,” its CEO stated.

Explaining the project’s impasse, the CEO cited significant issues with the large volume of excavation materials, unsuitability of excavated materials and the lack of adequate disposal sites.

He also highlighted delays in land expropriations and the public works department’s response times, all of which, he said, have prevented the Paphos-Polis road project from progressing.

Diko leader Nicholas Papadopoulos was critical on the Nicos Anastasiades government, which had awarded the contract to Greek company Intrakat in 2021.

He added that “we have seen it in other public contracts, such as the Vasiliko liquefied natural gas terminal and the Larnaca marina/port project”

Cyprus’ trade deficit dropped significantly by 17.4%, or €1.18 billion, in the first nine months of the year compared to the same period in 2023. The deficit amounted to €5.6 billion.

Lower import and export levels contributed to the narrowing gap. Imports decreased by 15.2%, totaling €8.5 billion while exports dipped by 10.6% to €2.9 billion.

The decline in Cyprus’ trade deficit can present both benefits and challenges for the economy.

Pros:  A smaller trade deficit means Cyprus is spending less on imports relative to what it earns from exports, which could reduce the country’s reliance on foreign goods. This may help boost local industries if more goods are sourced domestically. In the long term, a lower deficit could strengthen the nation’s balance of payments and support economic stability.

Cons:  However, the drop in exports highlights a concern. Cyprus may face reduced revenue from its goods sold abroad, which could slow economic growth if local industries depend on foreign demand. A weaker export performance could also impact job creation and business profitability in export-driven sectors.

The mixed picture suggests Cyprus may need to balance trade carefully, seeking to foster domestic production while ensuring export competitiveness.

The occupied north’s gross domestic product (GDP) reached just over €3.6 billion at the end of 2023.

That figure corresponds to a growth of 7.3 per cent, while the north’s GDP per capita was calculated at €13,753.

Were the north a recognised country, it would place 153rd in the world in terms of its nominal GDP, between Djibouti and Sierra Leone.

In terms of per capita GDP according to the same World Bank figures, it would place 62nd in the world, between Bulgaria and Palau.

The Republic’s nominal GDP was calculated at €31.3bn, while its per capita GDP is €32,097. This places it 102nd in terms of nominal GDP and 29th in terms of per capita GDP respectively.

Broken down by sector, commerce and tourism accounted for 25.8 per cent of the north’s GDP, while public services accounted for 12.9 per cent. Communications and transport accounted for 10.4 per cent.

Cyprus’s mortgage lending rates remained elevated in September, with the average rate across all monetary and financial institutions rising to 4.49% from 4.33% in August, the Central Bank of Cyprus reported.

The increase comes despite the European Central Bank’s recent trend towards lower interest rates.

Household deposit rates saw an uptick, with the average rate rising to 1.98% in September from 1.79% in August. Eurobank Cyprus offered the highest deposit rate at 2.83%, while Bank of Cyprus offered the lowest at 1.19%.

The data shows a widening gap between lending and deposit rates at Cypriot banks, with mortgage rates remaining more than twice as high as deposit rates.

The Bank of Cyprus reported a profit after tax of €401 million for the first nine months of 2024, representing a 15 per cent increase year-on-year.

Kathimerini reported that the Cypriot supermarket landscape is shifting as Greece’s Sklavenitis Group officially takes over Papantoniou Supermarkets. Sklavenitis now operates 27 stores in Cyprus.

This consolidation will likely drive other local chains and small supermarkets to boost their competitiveness. With inflation pressuring consumers’ budgets, Cypriot shoppers are increasingly looking for good value. Industry players hope this new setup will foster better service, high-quality products, and competitive pricing.

The Cypriot retail sector sees Sklavenitis’ expansion as a strong vote of confidence in the island’s economy, according to Andreas Hatziadamou, president of the Pancyprian Association of Hypermarkets. He expects this acquisition to increase competition, with each chain pursuing distinct marketing strategies to retain market share. Currently, Cyprus hosts about 80 large supermarkets and 155 total locations, with Sklavenitis holding 20% of the market and aiming to challenge the leaders. It competes with Lidl Cyprus, which has 22 stores and a turnover of €350 million and Alphamega, with 17 stores and 25% market share.

11/11/24

ENERGY RELATED NEWS

During a session of the Finance Committee last Friday, Energy Minister Giorgos Papanastasiou said the Cyprus-Greece electrical interconnection is progressing normally. He explained that by the end of 2029 it is estimated (by Nexans) that the project will be completed, adding that the first laying of the cable will be done within 2026. He also said that there are no problems for the time being in carrying out surveys on the seabed and that the ships are moving for the time being in national waters. Within the month a decision is expected to be made on the Republic’s participation or not in the share capital of the subsidiary company that will be created to promote the interconnection (Great Sea Interconnector). He noted that the results of the two studies, undertaken by an American house and the EIB, will soon be available. In addition, he said that there is €1.2 billion left for the project, which must be raised from lenders. “The alternatives we have are to do nothing and let the project promoter develop the project, or somehow give the €100m without buying shares, or give the €100m and become shareholders to GSI” he concluded.

Philenews reported that despite the predictions of many technocrats and politicians, Nexans, which is building the Great Sea Interconnector cable, reassured the energy minister last week that according to its own estimates, the contract of 1.4 billion for the cable will not need to be revised upwards. The Minister was also reassured that there was no imminent risk of significant delays in laying the cable, with delivery of the project estimated for the end of 2029. Before the meeting, there were rumors in Nicosia about a serious delay in the construction and laying of the cable.

Nexans also informed about the seabed surveys carried out by 2 ships. one in the maritime area of ​​Crete and one in that of Cyprus. They are proceeding normally and will soon expand to international waters.

The Minister stated last week to Parliament that the decision as to whether the Republic will purchase equity in the Great Sea Interconnector will be made towards the end of November. An American company is conducting a due diligence study and its findings are expected in the next 2-3 weeks. At the same time, a decision by the European Investment Bank (EIB) is eagerly awaited as to whether it will lend the interconnection 500 million euros.

The floating LGN regasification unit (FSRU) Prometheus is expected to set sail from Shanghai in the next few weeks, Energy Minister Giorgos Papanastasiou said.

This, after the agreement reached between ETYFA (the state-run Natural Gas Infrastructure Company) and Chinese CPP.

He also said that tendering procedures are underway for the completion of the land unit and pier works at the Vasiliko terminal.

The ship is ready for certification and will be taken to a natural gas regasification terminal in another European country, not excluding Egypt (according to info).

The minister mentioned that discussions are underway for the return to the EU of €68.6 million spent on the terminal in Vasilikos, out of the total European sponsorship of €101 million.

ExxonMobil will next year begin drilling for natural gas, Energy Minister George Papanastasiou said. The company will make two new drillings and the activity is related to the ‘Glaucus’ natural gas deposit that was located some years ago in block 10 of Cyprus’ Exclusive Economic Zone (EEZ). Next year’s initial drilling activity will take place in “a neighbouring block”.

Depending on what is found in those two drillings, the corporation will then “decide how [the natural gas] will be exploited,” and whether it will be done in tandem with gas extraction from the ‘Kronos’ reservoir in block six.

On the matter of the ‘Aphrodite’ deposit in block 12  he said the revised plan for the deposit submitted by Chevron in September is now being “discussed at a technocratic level”. The new plan, he said, would see the gas extracted from the ‘Aphrodite’ deposit connected to a floating production unit (FPU) which would then be connected to liquefaction infrastructure in Egypt, instead of creating new such infrastructure in Cyprus. His ministry’s goal to “conclude these discussions by the end of January 2025. 

The ‘Cronos’ reservoir, he said, is currently being “fast tracked” by Italian energy company Eni.

“We expect this month or next for there to be a development and production plan”  adding that the gas from the ‘Cronos’ reservoir will also be taken to Egypt for liquefaction and subsequent export.

He said the infrastructure used would be that which is currently in place for the liquefaction of natural gas extracted from Egypt’s ‘Zohr’ gas field, and that “based on forecasts, we will see the first Cypriot gas on the surface in the first half of 2027.”

Regarding renewables, he said Cyprus now has the capacity to produce a total of 950 megawatts of energy from RES (with 1,500 megawatts of installed capacity from conventional production) but only 20 per cent of Cyprus’ energy consumption is from renewable sources, given the lack of available storage systems. The Minister will put before cabinet a proposal to procure hybrid storage systems with a total capacity of 150 megawatts.

The European Public Prosecutor’s Office (EPPO) investigation into potential misconduct involving Cyprus’s Vasilikos liquefied natural gas (LNG) terminal project, which received €101 million in EU funds, is advancing and is now in a critical phase, according to Kathimerini (Apostolos Tomaras). Though no updates have been provided since the probe began in March, independent sources confirm that the investigative team is actively gathering evidence from government bodies involved in the terminal’s contract. The data collection phase is expected to wrap up by early 2025, paving the way for the next investigative stage, where a list of key individuals involved in the project will be compiled for questioning. The investigation will intensify around late 2025 or early 2026 when the EPPO assesses findings and compiles a list of senior officials, technocrats, and possibly political figures for further questioning to assess their roles in the project’s financial and procedural outcomes. If sufficient evidence of misconduct is found, legal actions could extend to third parties such as the European Investment Bank, which provided loans for the project and continues to back it.

Energy minister George Papanastasiou said that a formula is being considered to reduce windfall profits from renewable energy companies.

The minister clarified that this would not involve imposing a tax or fee on these companies but rather exploring a different, specific model.

According to Philenews sources, the Energy Ministry is considering drastic changes to the renewable energy trading system, viewing it as the only feasible and efficient solution at present to significantly reduce electricity costs while limiting profits earned by private producers and green electricity suppliers. The ministry is examining options including abolishing the current Transitional Regulation for the electricity market, which ensures excess profits for photovoltaic producers and energy suppliers.

Officials are also considering requesting a derogation from the European Commission to delay implementing the Target Model for competitive electricity markets, scheduled for late 2025.

The potential derogation request is linked to implementing a single-buyer model, which would require all private electricity producers to sell their output to a central supplier (EAC Supply in Cyprus’s case) through a tender-like process. This aims to prevent overpriced green energy while benefiting household consumers.

Left-wing Dialogos reported that during an economic forum organized by AKEL party, the Chairman of the Electricity Authority George Petrou referred to a “big crime” that was committed with the policies that were followed in the previous years in relation to the obstruction of the Electricity Authority to expand in the sector of photovoltaics and energy storage. “Most government plots were allocated to private individuals, who installed photovoltaics and sell the electricity at a price 10% lower than the production price of the EAC, which is ‘trapped’ with expensive fuel oil used to produce electricity”. There is a large production of energy from RES, however, he added, there is no storage option and if low-cost RES production is not included in the EAC mix, energy costs cannot be reduced.

In another article in the Cyprus Mail, it is noted that according to market information, private agreements made by renewable energy producers and big consumers use the Electricity Authority prices as a benchmark and are set approximately at 10 per cent, or occasionally 20 per cent, below the going EAC price. And the big profits of RES producers come from this. According to an energy researcher, the actual cost for the privately-owned solar farms likely ranges from five to seven cents per kilowatt-hour and they can then charge 25 cents, making impressive profits. This has created an oligopoly and the energy regulator needs to re-set the rules of the game.

ECONOMIC NEWS

The criminal court dismissed pre-trial objections put forward by the defence of Israeli property developer Simon Mistriel Aykut, questioning the jurisdiction of the criminal court to try the case and the conditions under which he is being held.

Aykut was arrested in June and is facing 242 charges of usurpation of Greek Cypriot property in the occupied north. He is accused of having developed and sold €43 million worth of property on Greek Cypriot land.

Judge Christiana Parpotta said it was unanimously decided that the Republic of Cyprus clearly holds the regulative jurisdiction over the north for all issues, including those concerning immovable property. The court also dismissed the objection regarding Aykut remaining in custody.

The defence then asked for a fortnight for deliberations with the court approving the request and setting November 22 for the defendant to answer to the charges.

Until then, he will remain in custody.

Philokypros Roussounides (who was the Director the hoteliers’ association) will replace Marios Tsiakkis who will retire from the position of Secretary-General of the Cyprus Chamber of Commerce.

Philenews reported that professional bodies of the private sector (lawyers, accountants, shipping chamber, technology associations) are demanding the finding of a formula to minimize the effects that 1,900 multinational companies in Cyprus with an annual turnover of more than €750 million will have from the imposition of the global tax of 15%. The European Directive approved in December 2022 requires the Republic to comply. In addition, affected entities want any formula found to prevent any US retaliation (blacklisting) as the US (also China & India) will not apply the global taxation. Currently, 55 counties have stated compliance. The Bar Association states that some member states are considering giving back the tax so as to reduce the impact on companies while the association of accountants emphasize the need for compensatory measures to prevent companies from fleeing.  Techisland organization has warned that 300 technology companies could leave Cyprus. The Legal Service warns that it is possible that a case against the Republic will be officially registered at the Court of the European Union.

Cyprus’ transition to electric vehicles faces challenges despite being a priority for reducing emissions, Transport Minister Alexis Vafeades said.

The Minister said that while electromobility remains a key objective under the national climate plan, the target of introducing 85,000 electric vehicles “is unlikely to be achievable”. He emphasised that emissions reduction goals could be met through alternative means.

“Electric vehicles remain expensive”, the minister said.

Consumers will have access to e-kalathi, an electronic platform for comparing supermarket prices, before the Christmas shopping season begins, Energy Minister George Papanastasiou said.

Cyprus’s average annual salary falls significantly below the European Union average, according to Eurostat data.

The EU’s average adjusted full-time annual salary reached €37,900 in 2023, marking a 6.5% increase from €35,600 in 2022. In comparison, Cyprus recorded an average annual salary of €26,430, up from €25,338 in the previous year.

Philenews reported that Global olive oil prices are predicted to decrease significantly in 2025, following two years of record-high retail prices, according to industry experts.

The anticipated price drop is attributed to improved weather conditions in Mediterranean olive-producing regions leading to increased yields in 2024, coupled with reduced consumer demand as shoppers switched to alternative cooking oils in response to soaring prices.

Eurobank’s third-quarter results mark a significant milestone as the bank fully integrates Cyprus’ Hellenic Bank for the first time since acquiring a majority stake, said Eurobank CEO Fokion Karavias.

As a result, Eurobank’s balance sheet now approaches €100 billion, with €50 billion in loans and €75 billion in deposits.

The PwC Cyprus Foundation announced a strategic sponsorship collaboration with Cyprus Seeds.

Cyprus Seeds is a private, non-profit organisation whose mission is to support the commercialisation of innovative research projects from Cypriot universities, research institutions and Centres of Excellence.

The PwC Foundation said that its support aims to complement the support being offered to Cyprus Seeds by other important corporations in Cyprus and abroad, as well as the Cyprus government.

Civil servants will receive their full benefits without any memorandum-era deductions and an increased cost of living allowance (CoLA) in 2025. The CoLA rate will remain at 66.7 per cent of the underlying index increase from the previous year. The adjustment will be suspended only if economic growth in real terms, seasonally adjusted, is negative during the second and third quarters of the preceding year

08/11/24

ENERGY RELATED NEWS

A seabed survey from Cyprus to Crete and vice versa is being carried out by Nexans, while the construction of the Great Sea Interconnector cable continues, the Minister of Energy, Trade and Industry, Giorgos Papanastasiou, said after being informed by representatives of the company about the progress of the project to date. “”We have been informed that there is a parallel seabed survey from Cyprus to Crete and from Crete to Cyprus with two different vessels, which are at this stage within national territorial waters, one in Greece, the other in Cyprus,”. It is expected that in the next few days they will go out into international waters. He explained that, based on the bottom survey, they are identifying the corridors through which the two cables will pass. As Mr. Papanastasiou mentioned, these are two cables with a diameter of approximately 15 centimeters each and they will be located in different corridors ( they will not be next to each other).

“They gave us the next steps, specifically that the two factories started, one in Norway and the other in Japan, the production of the cable, at an intensive pace,”. The reason two factories are working on the cables is to meet schedules, which ‘are pressing’.

The contract with Nexans consists of three parts: the survey, the construction of the cable, and its laying, noting that the company said that the laying of the first kilometers of the cable is expected to begin in 2026.

According to Nexans representatives, unless something major causes a change in the schedule, a change in cost is not expected. The project team that does the planning is over 30 people.

ECONOMIC NEWS

Politis reported that the Criminal Court in Nicosia is expected to announce today its decision on the pre-trial objections filed by the defense of 71-year-old Simon Mistriel Aykut. In case of rejection of the objections, which mainly concern matters of jurisdiction of the court for examining cases of this nature, then the way is opened for the start of the trial of the specific case. The defence holds the position that there is no jurisdiction of the court to continue this process, given that the offenses for which the defendant is accused relate to property located in areas not controlled by the government of the Republic of Cyprus. It also has the position that the offenses the accused is facing are based on laws of 2005 and 2006 and that they were not in force in 1974 when the Turkish invasion took place.

Yesterday, before the Criminal Court, the case continued with 25-year-old Yazan Sarai Eldin accused of usurpation. The court approved the request registered for the provision of legal aid to the accused. After yesterday’s proceedings, the defendant will have to find a lawyer to represent him,. The Criminal Court set November 27 for the defendant to answer the charges against him.

The 25-year-old Israeli lived and worked in Limassol on behalf of a company of foreign interests. He was arrested while leaving Cyprus via Paphos airport. He allegedly advertised on his personal accounts and online purchases on Social Media (facebook & Instagram) the sale of a residence in occupied Karavas. For the case, the Police have secured testimony from the legal Greek Cypriot owner of the land, who stated that he never gave his permission or consent for exploitation by another person. Offenses related to fraudulent transactions in immovable property belonging to another, illegal possession, possession and use of land registered to another and money laundering and other related offenses are being investigated against him.

Cyprus’ Finance Minister, Makis Keravnos, in comments to Kathimerini said that  “President Trump’s election is unlikely to shift American interests in our region, as current developments not only persist but appear to be solidifying.”

“Factoring in Cyprus’s energy potential, I believe the government’s initiatives, including economic matters, continue to hold significant promise for ongoing, positive outcomes.”

Eurobank has agreed to acquire a 12.84% stake in Cyprus’s Hellenic Bank from the Cyprus Union of Bank Employees (ETYK) for €243 million, increasing its holding to 68.81%.

The transaction cannot complete before 8 February 2025, pending regulatory approvals.

In a separate agreement, Eurobank will acquire an 8.58% stake in Demetra Holdings Plc for €32.4 million. Demetra holds 21.3% of Hellenic Bank as its second-largest shareholder.

Cyprus’s inflation rate fell to its lowest level in more than three years in October 2024, driven by a significant drop in fuel prices.

The annual inflation rate stood at 0.6 percent, marking the lowest rate since March 2021.

An MP claimed that the Cypriot state was preparing to “borrow again” to repay a €6.3 billion bailout granted back in 2013.

Zacharias Koulias (Diko) recalled that in 2013 Cyprus got a €6.3 billion loan from the European Stability Mechanism, and that this loan was coming due.

Euro area member states agreed a financial assistance package for Cyprus in April 2013. The European Stability Mechanism (ESM) disbursed nine loan tranches from May 2013 to October 2015. Cyprus will repay the principal on ESM loans from 2025 to 2031.

According to the ESM’s loan repayment schedule for Cyprus, the island will repay just under €400 million in 2025, €1 billion per year from 2026 to 2028, a little over €1 billion in 2029, €900 million in 2030, and €1 billion in 2031.

2025 will be “much more difficult” economically than previous years for Turkish Cypriots, the occupied north’s ‘economy minister’ Olgun Amcaoglu said.

07/11/24

ENERGY RELATED NEWS

The President and CEO of ADMIE (Great Sea Interconnector implementor) Manos Manousakis stated that the cost-benefit study for the Cyprus-Israel electrical interconnection has been assigned to a consulting firm and will be ready within the first quarter of 2025.

Asked about the Greece-Cyprus electrical interconnection, Mr. Manousakis said that the project is progressing smoothly, with underwater surveys underway in the territorial waters of the two states, and added that by the end of the year, there will be developments at the investment level.

Regarding the regulatory outstandings that exist in the Greece-Cyprus interconnection, he said that it is only a matter of time before they are resolved, given that there is an interstate agreement and the Republic of Cyprus will have made an investment decision on its participation in the project by the end of November.

ECONOMIC NEWS

After 20 years of failed efforts to privatise Larnaca port, the project should be entrusted to the port authority, according to left-wing Peo union.

It organised an event dubbed ‘Larnaca port, a history of failure. How it can be transformed to a success story’.

INBnews reported that the Paralimni marina is on track for completion, with the goal of being operational next summer. It is the only Cypriot marina project, worth 100 million euros, for which 100% of the financing comes from a Cypriot investor.

It is also perhaps the only major development project that, at a period when most or almost all projects, for various reasons are “stuck”, is being implemented seamlessly and without setbacks.

The Larnaca and Paphos airports recorded a 7.14% increase in passenger traffic in October 2024 compared to the same month last year, the Ministry of Transport reported.

“Despite escalating geopolitical tensions, we continue to see record passenger movement for the January-October period, with a 5.3% increase compared to the same period in 2023”, the ministry said in a statement.

The Administrative Court has rejected all appeals challenging the legality of pay, pension and lump-sum payment reductions imposed on state and broader public sector employees during the 2012 financial crisis.

The court dismissed 113 consolidated appeals contesting civil servants’ pay cuts and 64 consolidated appeals challenging reductions in pensions and lump-sum payments.

In its ruling, the court determined that the graduated reduction in salaries, pensions and lump-sum payments did not constitute a deprivation of property rights protected under Article 1 of the First Additional Protocol of the Human Rights Convention and Article 23 of the Constitution.

The court found that the cuts did not affect the core of the applicants’ rights nor their right to a dignified life and social security.

The Republic’s position that the reductions were a temporary measure aimed solely at ensuring public financial sustainability was accepted by the court.

The average gross monthly salary for employees in Cyprus reached €2,363 in 2023, reflecting a 7.3 per cent increase from 2022. Significant wage differences emerged based on gender, with women were found to be more concentrated in lower income brackets, with 46.4 per cent earning below €1,500, compared to 38.2 per cent of men.

Hellenic Bank reported a profit of €284.4 million for the first nine months of 2024, up from €240.7 million in the same period last year. 

Sklavenitis Cyprus (owned by Sklavenitis of Greece) has finalised its acquisition of Papantoniou Supermarkets, following approval from the Commission for the Protection of Competition.

The deal solidifies Sklavenitis’ position as a major supermarket chain in Cyprus.

With the integration complete, Sklavenitis Cyprus will now operate a network of 27 stores, employing 2,350 people.

06/11/24

ENERGY RELATED NEWS

Philenews reported that according to Greek media, the initial expectations of ADMIE (Great Sea Interconnector implementor) for the participation of the American state development fund Development Finance Corporation (DFC) in the share structure give way to information about the intention of the Fund to grant a loan of 400 million euros. This coincides with the concerns about the delay observed by the European Development Bank in approving ADMIE’s application for granting a low-interest loan of 500 million euros.

In the event that the EIB takes a final decision not to lend the electric interconnection, ADMIE and its partners will have to turn to lending of approximately 1.2 billion euros from commercial banks or investment funds, with a much higher interest rate. Also, if the EIB responds negatively, it will become more difficult for the Cypriot Government to decide to purchase equity capital in the Great Sea Interconnector.

United Arab Emirates Abu Dhabi National Oil Co has expressed interest in Cyprus’ emerging natural gas sector, Energy Minister George Papanastasiou has said.

“They expressed interest in the eastern Mediterranean,” Papanastasiou said but clarified that Adnoc had not made any formal request or proposal to the government.

“Their interest is mostly on de-risk assets (acquisitions). But at the same time they may consider entering a new potential licensing round in order to get into blocks,”.

Reuters reported in August, citing sources, that Adnoc and BP had met Cypriot energy ministry officials to discuss investments in the country’s natural gas sector.

The Cypriot minister is taking part in Adipec 2024, an international energy forum and also met executives from Chevron regarding the development of Aphrodite. The progress of the work of the technical teams was discussed, in order to finalize the Development and Production Plan.

ECONOMIC NEWS

The Ministry of Transport has launched an informal public consultation process to explore development options for Larnaca’s port and marina.

The electronic consultation runs until December 1, invites proposals for either joint or separate development of the port and marina facilities.

The ministry is seeking input regarding “optimal use and development of Larnaca’s port and marina infrastructure, either as separate projects or as an integrated development”.

Participants have been advised that the informal nature of the consultation means no agreements or financial commitments will result from this process.

The next phase will involve appointing specialised port and marina management consultants to provide professional guidance on optimal development strategies.

The port handled 446 vessels in 2023, processing 1.75 million tonnes of general and bulk cargo – primarily gypsum, animal feed and construction steel – along with 9,500 vehicles via Ro-Ro vessels and 17,000 passengers through its terminal.

The marina offers 320 berths. The development area between the port and marina spans approximately 211,000 square metres.

Approval is pending from the Council of Ministers for funding a municipal architectural competition for immediate marina improvements, including landscaping and Naval Club facilities, to be state-funded.

In a letter to the Minister of Finance regarding the increase in corporate tax rates for businesses with annual turnover exceeding €750 million, the Cyprus Employers and Industrialists Federation (OEB) argued that fewer than half of OECD countries intend to implement the 15% corporate tax. The European Commission has already referred Cyprus to the EU Court of Justice for failing to comply with the directive requiring EU members to implement the measure.  

Professional bodies indicate that implementing the tax rate would affect 1,900 companies in Cyprus & some companies might leave Cyprus.

In his response, the Finance Minister emphasised that Cyprus must comply with the 15% corporate tax requirement.

The number of registered unemployed people in Cyprus dropped by 15.7% year-on-year at the end of October, according to the Statistical Service.

The decline of 1,451 persons, or 15.7 per cent is attributed to reduced unemployment in financial and insurance activities, construction, trade, and manufacturing sectors, as well as fewer new entrants to the labour market.

The Central Bank of Cyprus has unveiled a new strategic framework for 2025-2026, built upon three pillars comprising specific actions aimed at institutional evolution, operational efficiency and modernisation.

05/11/24

Minister of Energy, Commerce and Industry George Papanastasiou praised the expanding momentum in the Cypriot export activity, stressing that in 2023 exports rose by an annual 38% continuing their steady rising trend of the past years.

He noted that this rise was driven mainly by exports of industrial products from the agricultural and manufacturing sectors, while the top 5 export destinations for Cypriot goods in 2021 – 2023 were Greece, Lebanon, Israel, Germany and the UK.

INBNews reported that the Director General of the Employers’ Federation Michalis Antoniou and the Secretary General of the Cyprus Chamber of Commerce & Industry Marios Tsiakkis appear convinced that the economy and the business world of Cyprus will be able to manage any result arising from the presidential elections in the USA. Both Mr. Antoniou and Mr. Tsiakkis do not expect an immediate impact on the economy or the business scene, considering that any long-term impact will depend to a significant extent on the policies of the candidate who wins the elections regarding US trade relations with the EU

An article in Kathimerini by Andreas Andreou (Managing Director of APS Andreou Property Strategy – Chartered Surveyors) notes that with just two months left in the year, October has shown that, despite some resilience, the real estate market remains unable to inspire optimism. Economic indicators for the average household have not sparked an uptick in investment interest, and the ongoing geopolitical instability is growing.

As a result, purchasing plans are being put on hold or postponed, and for younger generations, the prospect of homeownership is increasingly shifting from a dream to a challenge. Meanwhile, supply issues remain persistent, impacted by new licensing policies that are keeping prices high, adding further pressure to the market. These trends underscore a growing market crisis, driven by inflationary pressures from energy costs, rising interest rates, and a constrained supply that fails to alleviate high prices. External factors are further dampening activity, leading to reduced transaction volumes.

Health Minister Michalis Damianos expressed his concern over the risks of an oligopoly in the health sector, as private hospitals are being bought up by a limited number of private concerns.

Speaking at the House finance committee during a session on the state budget, he said the Health Insurance Organisation (HIO) has expressed its concern, but the ministry has no control over the matter if the competition authority approves the buyouts.

Cyprus and Egypt are set to deepen maritime collaboration through a joint commission, established during Deputy Shipping Minister Marina Hadjimanolis’ recent visit to the country.

Cyprus’s household disposable income increased by 4.9 percent to €20.71 billion in 2023, while consumer spending rose 9.8 percent to €18.70 billion, according to preliminary estimates from the Statistical Service.

A business association urged parliament to quickly pass an EU regulation that has to do with the screening of direct foreign investment in Cyprus, noting that the island plus Greece and Croatia are the only bloc countries to not have regulated the matter yet.

Pantelis Christofides, legal advisor to the Cyprus International Businesses’ Association (Ciba) told MPs that the relevant bill drafted is being discussed on-off in parliament for the past two years.

04/11/24

The Minister of Energy, Trade and Industry Giorgos Papanastasiou will have a meeting next Thursday with Nexans, the French company that manufactures the cable for Great Sea Interconnector.

He said that it is a meeting to hear about the course of implementation of the contract. The company will also have a meeting with the Cyprus Energy Regulatory Authority (CERA).

The submarine cable contract which Nexans is building on behalf of the project developer (ADMIE) is worth €1.4 billion. 

The Minister also noted that the Cyprus-Crete electrical interconnection project will likely face some delays, adding that completion by the end of 2029 now appears to be a realistic target.

Significant disparities in household electricity costs persist across the EU, highlighting the lack of a unified electricity market. Cyprus ranks as the seventh most expensive EU country for household electricity prices, including taxes and other charges, with prices also remaining high for non-household consumers.

Cyprus made strides in paying down its debt in the second quarter of 2024, settling over €1 billion in bonds and loans. According to the Finance Ministry’s Debt Management Office (PDMO), this repayment approach helps reduce the national debt, boost financial stability, and potentially open up new benefits for Cypriot citizens and the economy. 

The imposition in Cyprus of a minimum corporate tax of 15% on multinational companies with a turnover of €750 million is a ‘road with no return’, as the Republic has already been referred to the Court of Justice of the European Union due to its delay in harmonizing with the European Directive. The affected professional bodies are asking for a formula they propose to be considered, in order to limit the impact on 1,900 such businesses located in Cyprus that will be affected by the legislation. They also note that eleven countries from the G20 have not implemented the Directive.

The foreign investment control (FDI) bill, often referred to as the ”Lonestar” bill, has resurfaced in Cyprus, prompting fresh discussions about foreign ownership of critical sectors, according to a report by Panayiotis Rougalas in Kathimerini.

The bill allows the government to intervene when it believes foreign investors might threaten significant local businesses, particularly those involved in essential infrastructure and sensitive technologies.

This renewed focus comes after foreign investment funds have taken over several private hospitals in Cyprus, stirring concerns among lawmakers. Investment firms like CVC Capital and ECM Partners have made notable purchases, including Apollonios Hospital, Aretaios Hospital, and the American Medical Center in Nicosia. These developments have raised questions about how much influence the state can exert over investments with European or Cypriot ties, particularly when these funds come from outside the European Union.

The government seems more favorable towards certain transactions, such as Eurobank’s recent acquisition of a 56% stake in Hellenic Bank, indicating a more strategic approach to foreign investments in the banking sector.

The President of the Cyprus Chamber of Commerce & Industry, Stavrou Stavrou, called for incentives for businesses so as to be able to respond to the current environment of challenges and difficulties.

The incentives include the technological upgrading of businesses, the strengthening of their extroversion through the promotion of exports, the strengthening of investments, the promotion of incentives for mergers that will increase their competitiveness, the promotion of the Cypriot economy abroad and the best use of European resources.

The Cyprus Mail reported that as the drought continues to shrink water levels, farmers face ever increasing water cuts for irrigation with knock on effects on crop production and prices. They say they should get all the water from the reservoirs while domestic consumers should use desalinated water, supplied by a greater number of desalination plants. President of Panagrotikos agricultural organisation Kyriakos Kailas notes, among other things, that agricultural organisations had visited desalination facilities in Israel along with Agricultural Minister Kadis some years ago. “The Israelis laughed and said we could have as much [desalinated] water as we wanted because we are an island. Unfortunately, it all ended up in a drawer.”

A hydrologist and former government official (George Christodoulou notes that that more desalination plants is not the answer.

“Natural resources are limited, but desalination is not sustainable,” he said.

He explained that, apart from being extremely costly to produce water, it intervenes in the marine environment and waste from water treatment creates a critical zone of a few kilometres around the plant. “With all the salt going back into the environment, you end up with a dead sea in your own sea,” he added. Desalination accounted for approximately 5 per cent of the total electricity consumption in Cyprus

Philenews reported that in Cyprus, 14.3% of businesses experienced incidents of cyber-attacks while the EU average is 22.2%.

31/10/24

Energean has completed a significant investment to increase oil production at its Karish field off Israel’s coast, with critical equipment being shipped through Limassol port.

The M10 equipment (second oil train module) for the FPSO Energean Power was loaded onto a specialist vessel at Limassol port for transport to the offshore site. The M10 is expected to be operational in approximately six months, with Energean targeting daily oil production of 20,000 to 25,000 barrels from the field. In the first half of the year, average production from the Karish and Karish North fields in Israel reached 104,000 barrels of oil equivalent per day, peaking at 137,000 barrels in June. This included 2.5 billion cubic metres of natural gas, with the company supplying over 40 percent of Israel’s domestic gas demand. The company’s next production target is the Katlan field, scheduled to begin operations in approximately three years.

ECONOMIC NEWS

In a bid to ease energy expenses for vulnerable groups and promote sustainable housing solutions, the Cabinet approved a set of medium-term measures. The measures are designed to support households and young families, based on budgetary conditions.

Key initiatives include:

1. Electricity Bill Subsidy will now cover low-income pensioners and single-parent families. This extension will benefit approximately 22,200 low-pensioner households and 10,700 single-parent households eligible for the allowance. The subsidy is set to last until December 2025, with an estimated cost of €25 million.

2. Enhanced “Photovoltaic for All” Scheme: An additional €15 million will be allocated to expand the “Photovoltaic for All” program, which allows families, particularly large ones in smaller homes, to access solar power systems without initial payments. This initiative aims to assist about 3,000 families.

3. “Save-Energy Upgrade” Scheme: The Cabinet is also approving €30 million for the “Save-Energy Upgrade” program, aimed at improving energy efficiency in existing homes. This program will be available exclusively to individuals.

4. Zero VAT on Essential Items: The government ratified a previous announcement to implement a zero VAT rate on essential items such as children’s diapers, baby formula, adult diapers, feminine hygiene products, and fresh fruits and vegetables. This measure, which takes effect on November 4, 2024, will be in place until the end of 2025, costing an estimated €5.1 million.

Housing Initiatives:

– The Ministry of Finance will begin accepting applications for a 2% interest rate subsidy on mortgage loans for first homes purchased or constructed between January 1, 2022, and December 31, 2023. This program targets families with an annual income of up to €50,000 and has a total budget of around €33 million.

– Starting November 15, 2024, the Ministry of Interior will accept applications for the “Renovate – Rent” plan, aimed at revamping vacant homes and offering them at affordable rents (30% below market rate). This initiative involves 1,000 housing units and has a total estimated cost of €25 million, including tax relief for landlords.

– Additionally, a Housing Subsidy Scheme will provide one-time grants between €20,000 and €50,000 for young couples and individuals up to 41 years old, with about 400 expected beneficiaries and a total cost of €15 million.

Media reported that during the talks between U.S. President Joe Biden and President Christodoulides at the White House on Wednesday, energy issues (the recent contacts of the Cypriot side had with Chevron and Exxon) and the prospects of American investments in Cyprus (such as the privatization of the port of Larnaca) were also discussed. 

A proposal to limit cash transactions for goods and services to €10,000 was discussed by the House Institutions Committee, in an effort to help prevent money laundering.

Finance Minister Makis Keravnos assured that the government is committed to finding lasting solutions to the economic challenges facing Cypriot society, highlighting the importance of incorporating feedback from the public and political stakeholders.

Speaking at an Akel economic forum, Keravnos said that 13.9 per cent of Cyprus’ population is at risk of poverty (the EU average poverty risk is 21.4 per cent) & the government will continue to pursue a “balanced, socially oriented economic policy,” aimed at meeting both the community’s needs and the political expectations.

The minister then underlined the need to diversify Cyprus’ economic model, prioritising both new sectors and traditional industries.

Former Transport Minister Marios Demetriades and some of his relatives linked to the family law firm have been referred to the criminal court over the golden passport scandal.

A total of eight individuals and two legal entities face 59 charges including bribery, corruption, money laundering, conspiracy to defraud and violating the Council of Europe convention on criminalising corruption.

The defendants will appear before the criminal court on January 16 where they will be read out the charges.

In September, the ten priciest property sales in Cyprus totaled €30 million, with Limassol dominating the list, accounting for 62% of these high-value transactions. The most expensive property was a €5 million land plot in Yermasogeia, in Limassol’s Amathus municipality. The Limassol district recorded six of the top ten sales, totaling €18.5 million. Paphos followed with two transactions worth €6.5 million, while Nicosia and Larnaca registered one each, valued at €2.9 million and €1.8 million, respectively.

Across Cyprus, the 50 most expensive property transactions in September collectively amounted to €57.5 million, with Limassol properties making up 43% of the total value and Paphos properties representing 22.8%.

30/10/24

ENERGY RELATED NEWS

Philenews (Chrysanthos Manolis) reported that according to info., the efforts made by the Ministry of Energy to convince the European institution CINEA (European Climate Infrastructure and Environment Executive Agency) not to insist on a return from the Republic of Cyprus of the 68.6 million euros spent for the terminal in Vasilikos (from the total European sponsorship of 101 million euros) have not been fruitful.

CINEA recently replied to the Cypriot authorities that the justification they sent did not offer anything new or substantial to convince CINEA and the European Commission not to insist on withdrawing the sponsorship. Therefore, the original decision to refund the money has not been revoked. Under these conditions, the Government will make a new effort to submit to CINEA a new, stronger argument but the chances of success are not high.

In July 2024 it became known that the EU, and in particular CINEA, had asked the Cypriot authorities to return the entire amount that had been given as sponsorship for the construction of the terminal in Vassiliko. The decision to refund the amount (68.6 million) was due to the information brought to the attention of CINEA and the EU Court of Auditors about irregularities and illegalities in the process of awarding the tender for the terminal to the Chinese consortium.

Philenews (Eleftheria Paizanou) reported that the Ministries of Energy and Finance rejected a proposal by the Cyprus Transmission System Operator (TSO) and the Electricity Authority to install three central storage systems (at substations) so as to protect the safety and stability of the electrical system in times of need/emergency. The reason is that the Ministry of Energy has decided that hybrid storage systems (batteries placed in photovoltaic parks) are a priority. Although the EU had agreed το give a deviation and allow the EAC to install the three systems, the private sector reacted (mainly behind the scenes) insisting the Ministry proceeds with a subsidy plan for storage systems at PV parks.

At the House energy committee, MPs and officials continued debating the high cost of living impacting low-income households in particular.

The President of the committee MP Kyriacos Hadjiyiannis said that, in Cyprus, energy is controlled by “a clique” which is “interconnected and has common interests and goals”. The chairman of the Electricity Authority of Cyprus (EAC) had to fend off criticism that his organisation isn’t doing enough to contain the price of electricity. Giorgos Petrou conceded that the EAC lacks the technical know-how to purchase fuel whenever prices are relatively low. The EAC replenishes its fuel stocks approximately once a month, rather than buying in bulk once or twice a year. A major reason is that the organisation does not have the facilities to store massive amounts of fuel.

With a statement, the trade unions of the Electricity Authority criticize the Ministry of Energy for hasty and rash actions or decisions in relation to the electricity market and the emerging natural gas market.

They also warn that if the Ministry of Energy does not take the appropriate decisions without further delay, so that the two new flexible power generation units and storage system, are installed at the Dhekelia station, there will be a serious problem in the adequacy of electricity, with the risk of total blackout. The risk of power shortages is made more serious, the unions warn, by the delay in the arrival of natural gas.

ECONOMIC NEWS

According to Kathimerini’s Pavlos Xanthoulis, Brussels and Berlin are working to upgrade the Turkish Customs Union, viewing it as a pathway to strengthen economic ties with Turkey. This initiative comes as Euro-Turkish trade reached a staggering €206 billion in 2023, marking a significant increase from previous years. Turkey now ranks as the fifth largest trading partner of the EU, contributing 4.1% to its total trade volume, up from 3.3% in 2022.

The potential modernization of the Customs Union could more than double the trade volume between Turkey and the EU, which would provide a significant boost to the Turkish economy. Countries like Germany and France, which have substantial investments in Turkey, are expected to gain the most from this upgrade.

According to Kathimerini’s Dorita Yiannakou, Cyprus is set to establish a new National Sanctions Implementation Unit (NSIU) in the coming year, aiming to improve how financial sanctions are enforced in the country. This unit will replace the current Sanctions Control Unit (SCU) and the Financial Sanctions Advisory Committee (FAC), both of which operate under the Ministry of Finance. The NSIU will operate independently, similar to the UK’s Office of Financial Sanctions Implementation (OFSI). This change is expected to help coordinate better efforts among various organizations, including banks and law enforcement agencies, to make sure that sanctions are applied effectively. Since August, a team from Deloitte UK has been working with the Ministry of Finance to evaluate how sanctions are currently implemented and to make recommendations for improving the system. The NSIU will have several important roles, including:
– Coordinating Sanctions: The unit will work with different government agencies to ensure that economic sanctions are applied consistently.
– Handling Requests: It will assess requests for exemptions from sanctions and look into any possible violations.
– Providing Guidance: The unit will offer advice and clear instructions about how sanctions should be enforced.

Both European and American officials are pushing for the NSIU to be set up quickly. They believe that having this unit will help Cyprus fight financial crimes more effectively and improve the country’s international image.

Kathimerini reported (Panayiotis Rougalas) that in a move that could reshape Cyprus’s financial landscape, Parliament recently passed a European Directive that makes it easier for foreign investors to buy non-performing loans (NPLs) in the country,

Until now, if an international investment fund wanted to buy NPLs in Cyprus, it had to create a local company and meet Cypriot regulations under the supervision of the Central Bank of Cyprus (CBC). Now, with this directive, these funds don’t have to go through these steps. Instead, they can use their existing European licenses to buy troubled loans in Cyprus, as long as they assign a local company to manage them.

This means big players from across Europe can now more easily buy NPLs in Cyprus by partnering with established companies here, such as Themis, Gordian, and Altamira, which specialize in handling these types of loans.

Non-performing loans still make up a large chunk of the credit portfolios held by Cypriot Credit Acquisition Companies (CACs). According to a recent report from the Central Bank of Cyprus, 77% of these companies’ portfolios are NPLs, worth around €19.9 billion.

On the banking side, Cyprus is seeing historic lows in NPLs, with banks reporting just €1.65 billion in troubled loans as of July 2024. The ratio of NPLs to total loans has fallen to 7%.

There are media reports that Marios Tsiakis, the Secretary General of the Cyprus Chamber of Commerce and Industry (KEVE) will retire soon. His position has already been advertised.

There are media reports that the four major auditing firms in Cyprus are struggling to achieve their targets. PwC, Deloitte, KPMG, and EY have focused considerable attention on advisory services following the loss of Russian clients.

This development puts pressure on the leadership of the Big 4. PwC’s leadership seems particularly vulnerable, having recently come under scrutiny.

Of the four firms, Deloitte appears to be in a better position. It had already streamlined its operations earlier, and it is now in a more favorable position than the other three. 

The civil servants will receive a 1.5% salary increase from today, marking their first pay rise in 15 years.

The increase comes alongside revisions to allowances, overtime rates and cost of living adjustment (COLA).

According to a ministry circular, the basic salary increase, effective from October 1, will have a minimum annual increase of €331.28.

29/10/24

Philenews reported that in a matter of days, the President of the Republic and the Council of Ministers to make a decision on the official acceptance of the resignation of Andreas Pullikas from the presidency of the Cyprus Energy Regulatory Authority (CERA) and the appointment of a replacement. At the same time, however, the Government and the President personally are called upon to manage, albeit with a delay, an additional serious issue that arose in August at CERA and concerns an allegation by a manager at the Electricity Authority regarding the interventions of CERA’s vice president, Alkis Filippou, so as to promote the application of a specific company and connect to the electricity network.

The government’s new package of measures to combat rising costs of living will be ready next month, Finance Minister Makis Keravnos has announced.

Cyprus’ fiscal balance has made a remarkable recovery from recent shocks, with current fiscal surpluses exceeding pre-pandemic levels, according to rating agency Morningstar DBRS. The agency attributed this improvement to strong revenue growth, primarily driven by rising social security contributions and higher corporate tax revenues due to a broader tax base.

New residential property sales in Cyprus showed strong growth in the first nine months of 2024, with apartments dominating the market.

Data from the Department of Lands and Surveys revealed a 19.2% increase in overall residential sales compared to the same period last year.

Apartment sales surged by 27.7% while house sales declined by 9.2% to 918 units. The shift towards apartments is particularly pronounced among young buyers and families, driven by housing costs and financing constraints. Industry professionals warn that the combination of high demand, reduced supply and delays in new stock entering the market could trigger further price increases.

Eurozone households are increasingly placing deposits in banks outside their home countries with Cyprus, Greece and Slovenia experiencing more outward than inward deposits. Cyprus reported 9.5% outward and 4.5% inward deposit flows. The trend suggests progress towards banking union integration, with higher deposit rates and significant country differences likely contributing to the development, alongside digitisation and online banking offerings.

Media reported about concerns expressed at the House health committee about the purchase of a third private hospital by an investment fund as it could create an oligopoly in the provision of healthcare. It involves the purchase of 50 per cent of the share capital of the American Medical Centre by Hellenic Health Group, which had previously bought Apollonion and Aretaion. HHG owns several hospitals in Greece, but it belongs to CVC Capital Partners, which control hospitals all over Europe.

The Ministry of Transport has announced a budget of nearly 790 million euros for 2025, marking a 19% increase from 2024. The budget allocates 554 million euros for the ministry’s own projects, while 276 million euros will fund projects overseen by the ministry on behalf of other government departments. The budget includes major infrastructure roadwork & building projects.

MP of DISY Kyriakos Hatzigiannis expressed discontent to the government’s decision to transfer the Director General of the Ministry of Finance, Giorgos Pantelis, who will take up duties at the Ministry of Education. Hatzigiannis described the transfer as “unacceptable” and “unusual”, as he says, “it is connected to the demands of trade union, because he was an obstacle to the insatiable appetites at the expense of the state budget”. Politis reported that the views and practices of Giorgos Pantelis, in relation to the financial management of the state, were called into question many times after the election of President Christodoulides.

The two main hotel workers’ unions, OUXEKA-SEK and SYXKA-PEO, announced plans for imminent strike action after negotiations for a new collective agreement in the hotel industry reached an impasse. The unions jointly decided to reject the Labour Minister’s mediation proposal for renewing the collective agreement.

The Interior Ministry has declined to reveal the identities of individuals whose Cypriot passports have been revoked. The ministry disclosed only that 86 foreign nationals who had been naturalised as Cypriots have had their citizenship withdrawn, providing dates of the revocations spanning from September 2013 to August 2024. The refusal comes amid continued scrutiny of Cyprus’s former citizenship-by-investment scheme, which was terminated following allegations of abuse.

Philenews reported that it is not only the high costs of food items that that raises the financial pressure for households. Costs related to payment of professional handymen (plumbers, electricians, car maintenance etc.) have also risen substantially.

Cyprus is part of a group of countries that will cooperate with NASA for the return of humanity to the moon and then for the giant effort to send the first humans to Mars.

Deputy Minister of Research, Innovation and Digital Policy Nikodemos Damianou, in the presence of US Assistant Secretary of State James O’Brien, signed the Artemis Accords in Nicosia (established by NASA for the peaceful exploration and exploitation of space).

23/10/24

The Cypriot government and the Chinese CPP-Metron Consortium (CMC) have reached an agreement regarding the provision of a floating storage and re-gasification unit (FSRU) to the liquefied natural gas (LNG) terminal at Vasiliko, Energy Minister George Papanastasiou said.

Speaking to the House energy committee, he said the FSRU, named ‘Prometheus’ would now be delivered to Vasiliko within the next 60 days.

He said the agreement regarding the delivery of the FSRU was “financial”, and that as a result of the FSRU being delivered, the amount payable by CMC by way of guarantees had been reduced (media reported that one of the 2 guarantees of 35 million euros will be released as an

obligation). To this end, he clarified that the government had “not given any additional money” to CMC.

He added that “certain actions will have to be taken on both sides” for the FSRU to be delivered within the next 60 days, with these largely entailing the production of certifications to allow it to sail to Cyprus from Shanghai, where it is currently located.

The development ‘brings back to life’ a project which appeared to be stalling after CMC had in July terminated its contract with Natural Gas Infrastructure Company (Etyfa) to build the terminal.

The Minister of Energy Giorgos Papanastasiou stated, that the initial planning for the completion of the works on the jetty and the onshore infrastructure of the natural gas terminal in Vasiliko cannot be implemented by the subcontractors that had cooperated with the Chinese consortium (that departed from the project and is now seeking compensation) . ETYFA (the state natural gas infrastructure company) were consulted by its legal advisors that a bidding process must be followed and its under way. At the same time, ETYFA is considering offers for hiring a Project Manager, who will offer services to promote the completion of the project.

The Republic of Cyprus is expected to secure a new loan in 2025 to repay the first instalment of a €6.3 billion loan received from the European Stability Mechanism (ESM).

The ESM had provided €6.3 billion financial package for Cyprus, as part of its economic bailout programme.

Initially, the Republic was given €10 billion but chose not to draw on the remaining €2.7 billion as it deemed that this would not be needed.

The loan, disbursed in nine instalments between May 2013 and October 2015, will be repaid from 2025 to 2031, with an average repayment period of 15 years.

The International Monetary Fund has raised its forecast for Cyprus’ economic growth in 2024 from 2.7% to 3.3%.

The Cypriot Ministry of Finance is even more optimistic, predicting a growth rate of 3.7%.

The ongoing conflict in the Red Sea, marked by frequent Houthi rebel attacks, poses a grave threat to global shipping and international trade, according to the Cyprus Shipping Chamber.

In an interview, Thomas Kazakos, Director General of the chamber, highlighted the dire consequences these attacks have on maritime operations.

Kazakos called for stronger international cooperation and protective measures to safeguard seafarers and secure vital supply chains, underscoring the escalating costs and delays caused by these disruptions.

Kathimerini reported that in July, Cypriot authorities made contact with Delta Air Lines, with the aim of establishing a direct flight connection between Cyprus and the US. Efforts are ongoing, and not just with that airline. Targeting the American market requires coordinated actions that extend beyond the jurisdiction of a single ministry and involve many stakeholders.

One potential positive step in this direction could be Cyprus’ inclusion in the US Visa Waiver Program. 

22/10/24

Philenews reported that it seems an agreement has been reached for the delivery of the FSRU Prometheus.

Unofficial information states that in exchange for the delivery of Prometheus to ETYFA (the state natural gas infrastructure company), an amount of several tens of millions will be released in favour of the Chinese consortium from the total amount of 70 million estimated to be the guarantees deposited by them.

Other information indicates that the floating liquefied natural gas storage and regasification unit (FSRU) has been inspected in recent days by specialist technocrats with very satisfactory results.

The Energy Minister Giorgos Papanastasiou stated that the inspection shows that the ship is in an excellent condition.

Therefore, it is seaworthy, it has secured the necessary certifications (as an LNG Carrier) and now it must be considered a matter of time before it sails to Cyprus.

However, for the future operation of Prometheus as an FSRU (that is, for regasification) it will be necessary to carry out some additional conversions, with an estimated cost of approximately 10 million, which will be borne by ETYFA.

It is not known whether the improvement work on the ship will be done in Vassiliko or elsewhere in Cyprus or in a shipyard in a neighboring country.

Significant external and internal risks to the economy were highlighted by Finance Minister Makis Keravnos during the presentation of the state budget to the House finance committee.

Keravnos stressed the importance of maintaining a surplus in the fiscal balance, with the surplus projected to reach 2.7 per cent of GDP by 2025.

He also prioritised reducing public debt to 60 per cent of GDP by 2025, down from 68.9 per cent in 2024.

Other key priorities in the budget include the green transition, digital reforms and necessary structural adjustments.

The main risks include non-performing loans from previous years, and the significant deficits in the pension funds of semi-governmental organisations and local authorities.

Further concerns include potential compensation claims as well as potential EU fines for non-compliance with environmental directives.

Another significant risk relates to the developments at the Vasiliko gas terminal. Potential compensation claims that the Republic could face may amount to €529 million. The Minister noted following contacts made, there is no question of returning the (loan) money to the European Investment Bank and the European Bank for Reconstruction and Development, which amount to approximately 200 million euros.

Geopolitical risks from the regional crisis, increased shipping costs, and the financial impact of rising migrant flows are also a concern.

Challenges include climate change, natural disasters, compensation to farmers and the need to purchase water due to droughts.

Trade unions and other organized groups received assurances from the President of the Republic that measures will be taken to deal with the housing problem. Media reported that nothing specific was promised about new measures against high prices in the economy.

New home sales in Cyprus reached €1.9 billion during the first nine months of 2024, according to a report from Nicosia-based firm Landbank Analytics.

According to the report, this figure represents a 25 per cent increase compared to the same period in 2023.

Opposition Disy called for a “holistic” approach to tackling the problem of affordable housing, while for its part the government promised more programmes to help young people get on the property ladder.

The party leader outlined her party’s recommendations to alleviate the situation. One is to expedite the issuance of town planning and building permits by local government authorities.

21/10/24

VASILIKO NATURAL GAS PROJECT

The Minister of Energy stated that “we are moving in the direction of receiving the floating LNG regasification unit Prometheus, from the Cosco shipyard in Shanghai”. And soon he hopes there will be something to announce. Media reported that ETYFA and the Chinese company CPP have agreed on the parameters of the delivery. The finalization of the deal requires the notification and consent of the Court of Arbitration in London, which is expected to happen in the coming days. The Chines consortium has already been paid 190 million euros for the FSRU and another 10 million euros  are required for works to be done in Cyprus, so that the ship is capable of working for natural gas regasification. Should the negotiations lead to a formal agreement, ETYFA will have to decide whether to dock Prometheus in Cyprus, to carry out the works required for its operation as an FSRU, or whether to take it to a shipyard outside Cyprus for the necessary work. According to sources familiar with the discussions, the conversions to the FSRU will take 5 to 6 months.

An article in Kathimerini notes that four months after the Chinese consortium pulled out of the construction of the Vasilikos terminal, efforts to fill the gap are still getting started. ETYFA, a part of DEFA that owns the project, is looking for consultants with experience in unfinished energy projects. A key focus for the Cypriot government is the delivery of the floating storage and regasification unit (FSRU) & trying to negotiate a resolution to avoid a lengthy legal battle in London. It notes three potential scenarios regarding the natural gas project: 

Pessimistic Scenario: If negotiations with the Chinese consortium fail, ETYFA may need to rent a new floating unit. This would mean starting a new project from scratch, pushing the expected operational date for the terminal and the introduction of natural gas to after 2026.

Realistic Scenario: If the situation improves and the ‘Prometheus’ ship becomes operational, the Vasiliko terminal could be ready for use by 2025. The government would then focus on preparing for the generation of power through photovoltaic (PV) energy.

Total Failure Scenario: If all current efforts fail, the Ministry of Energy may turn to the private sector for new proposals to import natural gas. This would represent a significant shift in strategy and could lead to a completely new approach to introducing natural gas in Cyprus.

INTERCONNECTOR

The Minister of Energy reiterated that there are other options, apart from the Electricity Authority Networks and the Cyprus Hydrocarbons Company (CYC), for the participation of the Republic of Cyprus in the share capital of the Great Sea Interconnector. The possibility of the representative of the govt. in the share capital of GSI (with 100 million euros) being the Cyprus Transmission System Operator is still on the table (it was the initial preference of the state but stumbled on issues with European Commission). The possibility of getting some kind of derogation from the EU Directive (like Greece) will be looked into.

EMISSIONS

The Dhekelia power plant has been emitting pollutants at levels far exceeding legal limits, according to data released by the Department of Environment.

USURPATION OF GREEK CYPRIOT PROPERTIES IN THE OCCUPIED NORTH

Three pre-trial objections were submitted from the defense of Simon Aykut who is facing charges related to usurpation of Greek Cypriot properties in the occupied North. The two concern the court’s jurisdiction to judge the case (which the prosecution noted is an unacceptable position) while the third concerns the defendant’s right to personal freedom, the conditions of detention and the restriction of his rights. The court will take a decision on these objections on November 8 and the defendant will remain under detention/ in custody until then. Aykut is accused of having developed and sold €43 million worth of property on Greek Cypriot land in the north. Turkish Cypriot media reported that Turkish Cypriot leader Ersin Tatar claimed that Antonio Guterres requested amnesty for Simon Aykut during the recent meeting with President Christodoulides who “froze when he heard this”. The Presidential Palace denied this,

A German real estate agent who is also accused of usurping property in the occupied territories denied all charges. The Nicosia Criminal Court rejected all the pre-trial objections raised by the defense and a new hearing has been set for December 18, 2024. Until then she will remain in custody.

The arrests made in relation to the usurpation of Greek Cypriot properties and the inability of the “real estate commission” to function effectively have brought the construction sector in the occupied North to the point of collapse, according to Osman Amtza, president of the “Turkish Cypriot Construction Subcontractors Association”.

OTHER ECONOMIC NEWS

The Ministry of Transport will launch an informal public consultation process in November to gather opinions from potential investors on separate developments for Larnaca’s port and marina, Transport Minister Alexis Vafeades told Philenews.

These views, along with a study by experts expected to commence work by early 2025, will shape the future of the two state infrastructures following the collapse of an agreement with Kition Ocean Holdings last May.

The consultation process, although informal, is crucial in determining whether the verbal interest expressed by “many” Cypriot and foreign entrepreneurs in recent months is substantial, the minister added

In an interview Finance Minister Makis Keravnos stressed his unwavering commitment to the country’s economic stability.  Keravnos acknowledged that he faces daily pressures to relax fiscal discipline, with demands coming from all directions & affirmed that he won’t yield to populism. Keravnos also expressed caution regarding the costs associated with the electricity interconnection project, warning that rising expenses could impact the overall state budget.

Politis reported that expenditures earmarked for defense have recorded an increasing trend in recent years. In the state budget of 2025, the funds for the purchase of weapon systems amount to €180 million. It includes the purchase  of UAV’s, an anti-Drone system to intercept unmanned aircraft, a modern air defense system, an anti-tank missile system as well as six Airbus H145M light attack helicopters.

The govt. portal, the Cyprus Electricity Authority, the Telecommunications’ Authority, the Bank of Cyprus, the Larnaca Airport & EKO petroleum successfully repelled cyberattacks over the weekend. 

Philenews reported that Logo Jet ltd (company registered in Israel)  intends to acquire a stake in TUS Airways (49% belongs to Global Knafaim).

Media reported about the verbal confrontation between the government and left-wing opposition party Akel over the issue of affordable housing. A Eurostat survey showed that 11.2% per cent of people in Cyprus experienced housing difficulties in their lifetime while the EU average was 4.9%. Finance Minister Makis Keravnos stated that Cyprus does not face any housing problem but real estate experts note that with construction costs, rents and loan payments all on the rise, a growing number of people are finding it difficult to get on the housing ladder. Meanwhile, In terms of purchasing power, Cyprus ranks below the EU average while 23.2% of households in Cyprus reported difficulty in meeting their financial obligations. 7.4% of working Cypriots aged 18 and over were at risk of poverty, slightly below the EU average of 8.3%.

Cyprus recorded the highest number of lawyers per capita but one of the longest delays in resolving cases according to a new Council of Europe (CoE) report. Cyprus had 505 lawyers per 100,000 residents in 2022 while the average number across Europe was 180.

Philenews reported that the way is now open for the announced takeover of Papantoniou supermarkets by Greek operated Sklavenitis supermarkets after the green light from the Competition Protection Committee.

The contractor responsible for building the new motorway linking Paphos and Polis Chrysochous has requested an additional €32 million to complete phase one of the project by April 29, 2027 – three years later than the original deadline.

According to media, the contractor has so far completed 21 per cent of the project and had been already paid €16 million.

Initially, the project was set to be finished by November 26, 2024, with a total cost of €72 million plus VAT.

Philenews reported that the Tax Department has ramped up efforts to identify potential tax evasion by monitoring social media platforms for displays of extravagant lifestyles.

16/10/24

Nicosia said it has received no fresh proposal regarding the export to Cyprus of natural gas from Israeli offshore fields following media reports of a purported $1.5 billion deal on the cards. “We have no updated proposal, however if a specific and detailed government-to-government proposal does come from Israel it should include the sales price of natural gas at the connection point of conventional electricity producers,” Energy Minister George Papanastasiou said.

He stressed that completing the natural gas import terminal at Vasiliko remains “the fastest and most realistic proposal for importing natural gas”.

News reports in recent days claimed Cyprus and Israel were in talks for Cyprus importing natural gas via a pipeline, for a 10-year contract said to be worth the $1.5 billion. Meanwhile, a spokesperson for Israel’s energy ministry told S&P Global that the energy ministries of Israel and Cyprus are in talks “on issues of mutual interest and possible cooperation”. Politis reported that the government is primarily focused on resolving the complications surrounding the natural gas import terminal at Vasiliko.

The state-run company in charge of the liquefied natural gas (LNG) import terminal denied media claims that the jetty at Vasiliko is at risk due to corrosion and hinted that ulterior motives might be behind the reports. Philenews reported it had got hold of correspondence where Hill International  (previously tasked with monitoring the work of the contractors and sub-contractors until August 24) warns of structural integrity issues for the jetty caused by corrosion of the piles.

Philenews reported that, originally, the cost of the Vasiliko project was estimated at 289 million euros but the addition of 25 million euros (requested by the consortium due to increased costs), the total cost of the project rose to 314.5 million euros. In addition, the contract foresees a cost of 10 million euros per year for maintenance-operation of the FSRU Prometheus by a Norwegian company, for a period of 10 years, with the right to extend for another 10 years. Of this amount (314.5 million euros), the Republic of Cyprus paid approximately 239 million euros. Therefore, approximately another 75.5 million euros must be paid. However, no one guarantees that the financial balance for the state is this. In order to determine the final amount that the Cypriot taxpayer will be asked to pay, very difficult negotiations will be preceded by the state with the Chinese company, which is still holding the FSRU Prometheus in Shanghai, but also the decisions of the Arbitration Court in London.  CPP’s request at the court for approximately 136 million euros is pending, as well as its request for the deletion of the right to retain guarantees (by the state) totaling 70 million euros.

Trade unions representing workers at the Electricity Authority of Cyprus (EAC) dismissed outright the idea of the organisation relinquishing its ownership and control of the grid, arguing that any such action would cause “turmoil and chaos” in the energy sector.

In a joint statement, they rejected a proposal by Energy Minister George Papanastasiou to take the ownership and control of the electricity grid away from the EAC and giving it to a state-owned company. In turn, this state-owned corporation would invest, on behalf of Cyprus, the €100 million in the holding company that would manage the Great Sea Interconnector. 

The unions also complained that the EAC, despite its technocratic expertise, was never asked for its feedback on the Great Sea Interconnector.

With the title: Startup guru Tal Catran on boosting Cyprus’ startup scene and the one factor that will attract Israeli investors, Cyprus Business News hosted an interview with Tal Catran.

The interview notes that  being able to operate under pressure, making self-belief and self-motivation a key part of your approach, and choosing the right people to work with including mixing generations to benefit from all their strengths are just some of the keys to success suggested by Tal Catran. Israel is well-known for its own thriving startup scene and, the country’s recipe for success is something keynote speaker, government, municipality and business consultant Catran is often asked about.

Catran revealed what he considers to be some of this recipe’s most important ingredients, pointing out the route Cyprus could follow to strengthen its own expanding startup landscape.

Catran explained that in his expert opinion, Cyprus’ invitations to Israeli businesses and investors should be made on site, in Israel. “Don’t shout out from miles away ‘Come on over.’ You need to take us by the hand and bring us over,” he said.

Finance Minister Makis Keravnos, addressing the third annual event for Cyprus’ EU recovery and resilience plan,  said Cyprus had already applied for a fourth grant from the EU mechanism and was preparing to apply for a fifth. Grants since 2021 reached €500 million, which is about 50 per cent of the total grant for Cyprus. The application for a fifth grant will increase grants by the end of the year by €120 million.

A coalition of Turkish Cypriot organisations demanded the release of businesspeople arrested by the Republic of Cyprus on the charge of developing or promoting the development of Greek Cypriot properties in the occupied north. During a meeting between President Nikos Christodoulides, Turkish Cypriot leader Ersin Tatar and UN Secretary General Antonion Guterres in New York, among other things discussed, Tatar tried to convince Christodoulides to halt arrests of business  involved in the usurpation and resale of Greek Cypriot properties in the north. Political sources said this was a dead-end proposal which violates international law. Christodoulides reportedly replied that the executive power did not influence the judiciary in EU states.

The Water Development Department has announced plans to address water supply issues in Limassol and Paphos, officials told a parliamentary committee.

The strategy includes four new mobile desalination units nearing final design stages, as well as two permanent units for Limassol and Larnaca. 

A contract for a project worth €34 million has been signed between the government and a private consortium for the expansion of facilities at Pentakomo in Limassol that will increase the scope of aquaculture in the area.

The deal involves the creation of port and land facilities to serve aquaculture farmers.

It is being financed by the EU as part of the island’s recovery and resilience plan.

The Cyprus Consumers Association has revealed that consumers are paying between 97% and 342% more for fruits and vegetables compared to producer prices.

14/10/24

INTERCONNECTOR

Finance Minister Makis Keravnos has called for careful consideration of the country’s participation in the electrical interconnection project, citing significant financial implications. He noted the project’s estimated cost of €2 billion represents a substantial portion of Cyprus’s annual budget of approximately €10 billion and the country’s involvement in this investment is a very serious matter and must be studied very carefully.

He emphasised the need for thorough feasibility studies and economic assessments before a final decision is made on state participation.

Keravnos drew particular attention to the financing aspects of the project, noting that the implementing body, Great Sea Interconnector, may need to borrow over €1 billion.

“We must know in advance the terms of such a loan, the interest rate, and whether state guarantees for repayment will be required”. 

The Cyprus  Mail reported that the proposal of the Ministry of Energy presented to the Electricity Authority recently, is, in essence, an idea to nationalise the electricity authority’s (EAC) grid and its operation so it can turn into a full state-owned operation.

A subsidiary company will then be created which will invest €100 million as the state’s capital share towards the Great Sea Interconnector (GSI). 

And the EAC will basically become just an energy producer.

The Chairman of the Authority said they would assess the proposal and give an answer by the end of November, around the same time as the study by the European Investment Bank (EIB) on the feasibility of the GSI and financial recommendation for how to materialise the project.

“There is no profit to the EAC from this manoeuvre. The state needed to find a way to create a company to invest in the GSI cable, it cannot do so directly,” the Chairman said.

Meanwhile, the trade unions will stand in the way of any plans of the government regarding the involvement of the EAC in the Interconnector and the separation of the grid.  The unions believe that the government proposal is simply a pretext for its dismemberment and privatization of its networks. Media reported that in case that the EAC does not accept the proposal, the Cyprus Hydrocarbons Company (CYC), which is a state-owned company, could also be an option.

DRILLINGS

Cyprus’ first natural gas extraction will most likely be from the Kronos reservoir in block 6, which may be in 2027, Energy Minister George Papanastasiou said in an interview. He also said that in early 2025, ExxonMobil will begin drilling an exploratory well in the Electra site in Block 5 and a well in the Glaucus site in block 10. As for Aphrodite, he said Chevron has submitted a preliminary development plan, which seems to be in the intended direction. “The aim is to complete the plan within four months and there should be no surprises down the road.”

VASILIKO PROJECT

The Minister of Energy said that for the arrival of natural gas and completion of the terminal at Vasiliko, the state natural gas infrastructure company (Etyfa) was “cautiously proceeding” with the appointment of a project manager to assist in the securing of offers to narrow down the company to complete the remaining jetty and land works at the LNG terminal site.

Regarding the regassification unit (Frsu) Prometheus, where there are disagreements with the Chinese consortium CPP Metron, the minister said “intense negotiations” were underway and the securing of the vessel, which is legally the property of the Republic, was in its “final” stage.

OTHER ECONOMIC NEWS

Philenews reported of a new Israeli investment of tens of millions in Cyprus by Fattal. It concerns the acquisition of Elias Latsi Holiday Village Resort, which will soon be completely renovated and renamed Leonardo Club Family Resort.

The new project is expected to offer a new experience in Paphos, with state-of-the-art facilities and many activities for families and children, including a water park. Based on the plans, the estimated cost amounts to €55 million, while with the issuance of the necessary permits, the project will be completed within 1.5 years.

Measures aimed at tackling the high cost of living will return, Finance Minister Makis Keravnos announced , as zero VAT will be implemented on a number of products.

There will be zero VAT on diapers for infants and adults, baby milk, female hygiene products, fruit and vegetables. Opposition parties accused the government of incompetence. Both left-wing Akel and right-wing Disy accused the government of lacking a coherent plan and being out of touch with the realities faced by Cypriots.

The French Supreme Court has upheld an international arbitration decision in favour of the Republic of Cyprus, rejecting a $1.4 billion compensation claim against the country. The case stemmed from actions taken by the Central Bank of Cyprus to place FBME Bank under resolution after the U.S. Department of the Treasury classified FBME as a financial institution of “primary money laundering concern”.

Philenews reported that the area east of occupied Kyrenia has become unrecognizable due to illegal developments and the worst thing of all is that no one can stop this situation. Through the cases of usurpation of Greek Cypriot land in the occupied territories that the Police has recently been investigating, it appears that the areas of occupied Agios Ambrosios, Kalogrea, Akanthou as well as Trikomo are at the center of huge developments where hotels, marinas and countless residences have been built. 

Politis reported that for approximately a year now, there has been a change in the attitude of the government and the prosecuting authorities of the Republic as regards the usurpation of Greek Cypriot properties in the occupied North. A 4th case has been brought to court while five persons from Israel, Germany and Hungary facing charges. The cases of a woman from Germany and 2 women from Hungary even have a common denominator which is the Kayim construction group, closely linked to Turkish Cypriot leader Ersin Tatar.

According to the general director of the Cyprus Hotel Association (Pasyxe) Philokypros Roussounides, despite the ongoing conflict in the region, hotel bookings have not shown a significant downturn. 

However, he expressed caution regarding the future, pointing out that the broader Mediterranean area could experience impacts next year due to the conflict.

Philenews reported that Cyprus has seen a significant reduction in its trade deficit. Figures for the January-August period show a marked decrease in imports and a noticeable decline in exports. The main reason is that most probably, high prices have led to decreased demand, consequently lowering inflation but also reducing imports (and the trade deficit).

Total imports of goods from January to August 2024 amounted to €7.5 billion, a 15.5% from the corresponding period of 2023.

Total exports of goods for January-August 2024 reached €2.6 billion, marking a 9.0% decline.

Cyprus has seen significant economic growth across various sectors in the first half of 2024, according to the latest “Monthly Economic Developments” report from the Statistical Service.

Manufacturing production rose by 3.7% between January and July 2024 compared to the same period in 2023. The construction sector showed robust growth, with the total area covered by approved building permits seeing a 46.5% increase year-on-year. Vehicle registrations rose by 16%.

The government unveiled its strategy for the agricultural sector aimed at sustainable development, innovation and economic resilience. It aims to increase the contribution of the agricultural sector to Cyprus’ GDP, which currently stands at 1.8 per cent.

The new strategy was presented by Agriculture Minister Maria Panayiotou. It includes a number of actions such as addressing marketing gaps in promoting produce, water management interventions and the adoption of smart farming technologies. etc. with a budget of €109.3 million for the period 2024 to 2028.

Meanwhile, the Director of the Water Development Dept. stated that they have been working to draw up an action plan to deal with the water shortage that will be submitted to the cabinet for approval very soon.

It includes immediate actions which include the provision of mobile desalination units to the Paphos and Limassol district and an expansion of the existing desalination units’ capacity. The possibility of “artificial rain” being created by cloud seeding is also something being discussed.

Philenews reported that despite rising rental costs in Cyprus, the country’s increase from 2010 to the second quarter of 2024 is among the lowest in the European Union (EU) and the Eurozone.

According to Eurostat, Cyprus experienced a rental price increase of 9.02% during this period, significantly lower than the EU-27 average of 24.83% and the Eurozone-20 average of 22.95%.

The cost of residences in Cyprus has also increased, though not as dramatically as in some other countries.

09/10/24

Philenews reported that a proposal that, if implemented, will bring huge changes to the Electricity Authority was presented by the Minister of Energy to the administration and senior management of the organization.

The idea is for the possibility of the regulated (monopoly) activity of the Networks (currently belonging to the EAC) to turn into a 100% state company that will create a subsidiary company, which will invest, on behalf of the Republic, 100 million in the share capital of the Great Sea Interconnector.  For the Government, the EAC is the most suitable organization to manage the participation (under consideration) in the 2 billion project and wants to avoid mistakes like the contract for the natural gas terminal in Vasiliko.

The proposal caused numbness in the EAC leadership while the reaction in the ranks of the unions is particularly cautious.

A worry is the possibility of exposing national infrastructures to the business risk of a mega-project, with many technical, financial and geopolitical challenges. Another worry is the possibility of reopening the discussion of private investors entering the Networks, something that was ruled out in 2017. From the government’s point of view, the risk to the national electricity grid from any investment risk is not valid, since the investment will be made by a subsidiary company of the Networks. It also assures that there is no intention to alienate the national wealth of Networks from full state ownership. The original idea that either the Cyprus Transmission System Operator (TSO), after becoming independent from the Electricity Market Operator, or EAC Networks, without alienating them from the parent organization, would invest in GSI was deemed unfeasible, due to incompatibility with the EU acquis and the Directives concerning competition in the electricity market.

For this reason, the independence of the Networks, without alienating them from the state, was considered an appropriate option, if this will be the final decision of the Government.

The option of the participation of the Republic of Cyprus in the Great Sea Interconnector through the Cyprus Hydrocarbons Company (ΕΙΚ) has also been discussed. Although this option has not been definitively abandoned, the need to seriously strengthen the company (100% state-owned) with technocrats specialized in electricity, networks and transport management is problematic.

Chevron has suspended work on a subsea pipeline for the third phase expansion of the Leviathan gas field due to the ongoing conflict in the region, project partner NewMed Energy announced.

The suspension, expected to last until at least April 2025, will delay the project’s completion by a minimum of six months, NewMed Energy told the Tel Aviv Stock Exchange.

NewMed Energy, which holds a 45.34% stake in Leviathan, stated that while the delay would not significantly impact the project’s overall discounted cash flow, it “is expected to have a material negative cumulative effect on the expected cash flows in 2025”.

Chevron is the project operator with a 39.66% stake and the expansion delay is likely to reduce Israel’s gas available for export.

Last year, 75% of Israel’s exported natural gas went to Egypt, with the remainder going to Jordan.

Kathimerini reported that in the last eight months, Cyprus has acquired an extraordinary glamor for investors of the region, who are moving at a fast pace either by expanding their businesses in the country or by creating a plan b to transfer their companies due to the situation in the Middle East. Cyprus is attracting more and more Israeli investors, who seek to expand their businesses but also to scout the ground for new multi-million investments in various sectors. At the same time, the disorderly situation in the Middle East has created investment activity in the last quarter also from Lebanese, who have already invested in Larnaca that is popular for them and are leaving behind Limassol. Large multinationals with Israeli interests are seeking to create a temporary base until the situation in the Middle East stabilizes, as they know that Cyprus provides high-quality services and, above all, is a safe investment destination, according to the relevant authorities involved with attracting investments . Additionally, there are examples of companies creating a plan b, with the aim of having a base here in the event that the situation reaches a point where they cannot carry out their operations. There are also cases, however, where Israeli businessmen no longer wish to have any business activity and presence in their country, with Cyprus being their number one choice for transferring their operations. The fields of activity include fintech, regtech, gametech, edtech, shiptech, etc. There are also examples of companies involved with construction, industry, hospitality, health, fund management but also with cyber security and artificial intelligence (AI).

An example is Fattal of Israel that has created a network of hotels throughout Cyprus. In particular, Fattal’s investments in Cyprus prove the vote of confidence in the island as it currently has a total of 10 hotels.

Another example is Global Knafaim, which deals with the purchase and leasing of aircraft and owns 33.33% of the Cypriot airline TUS Airways.

Israelis are also targeting additional investments of millions in the hotel industry.

Lebanese are also showing interest with 35 companies expressing specific interest in recent months. These companies are active mainly in the construction sector but also in the pharmaceutical industry. A typical example is the Franco-Lebanese investment management company Murex, which maintains a presence in Cyprus from 2021 with 200 employees and is set to reach 500 by the end of the year. A new hospital is also being planned in Limassol by Hôtel-Dieu hospital, of Lebanese and French interests, which is expected to be ready around the end of 2025. It is one of the leading hospitals in Lebanon with a presence in Beirut and Paris.

With the aim of hearing the voice of Israeli investors, Invest Cyprus organized a meeting with the 10 largest companies of Israeli interests active in Cyprus. The entrepreneurs confirmed their desire to continue doing business in Cyprus as they feel safe, in a protected framework that offers business facilities. The Israeli investors also brought up issues that concern them, with the competent Ministry assuring them that it is going to take them seriously. Routine banking are a brake to business growth as was noted by the Israelis. They are also troubled by issues related to the bureaucracy but also social issues related to living here (schools, public transportation, etc.).

The Cyprus Mail reported that DND Homes (based in Boston) and its subsidiary DND Cyprus, based in Famagusta, currently advertising 622 luxury homes in the north, are being investigated for the usurpation of Greek Cypriot properties.

Disy MP Nikos Georgiou sent a letter to Foreign Minister Constantinos Kombos seeking answers, however Kombos replied in confidentiality and the letter was not made public.

Behind DND Homes and DND Cyprus is Turkish Cypriot businessman Ozan Dökmecioğlu, who is closely linked to the north’s leadership.

The authorities are also gathering information to make a case in court and arrest warrants may be issued in the near future against Dökmecioğlu and senior staff of his company.

DND Homes is included in a list of 24 usurpers of Greek Cypriot properties made public by the Cyprus Greens in August.

Nicosia criminal court rejected pre-trial objections put forth by a German national held in connection with usurping Greek Cypriot property in the north.

Her defence lawyer had argued she would not receive a fair trial due to bias.

Another point put forth by the defence lawyer concerned the charge sheet, as well as conflicts the lawyer said exist between national law and the European Convention of Human Rights.

Prosecution asked for time to examine the objections, and the hearing will resume on October 17 at 10am.

Philenews reported that hotels in Larnaca are experiencing unusually high occupancy rates due to an influx of visitors fleeing the escalating conflict between Israel and Lebanon.

Marios Polyviou, president of the Larnaca Hoteliers Association (PASYXE) said that “there’s high demand correlating with flights from Lebanon. It’s mainly Lebanese citizens and third-country nationals“.

Many visitors are using Cyprus as a temporary haven or transit point.

Hotel occupancy has also increased due to the presence of international delegations preparing for potential mass evacuations from the region

The betting industry now accounts for 3.72% of Cyprus’ GDP, according to Permanent Secretary of the Ministry of Finance George Pantelis.

08/10/24

INBNews reported that a new hotel with a capacity of 480 beds, named Leonardo Club Latsi, is being planned in Paphos by the Fattal Hotel Group while it is also opening another NYX hotel in Nicosia.

Philenews reported that in a letter to the Minister of Energy, which was communicated also to the Parliamentary Energy Committee, lawyer Ionas Nicolaou (former Minister of Justice and former Member of Parliament) has submitted a proposal for the installation of 800 megawatt hours of electricity storage systems from private photovoltaic parks, that could be offered a grant from the state, at specific rates.

The proposal is submitted on behalf of a significant number of companies that are active in the utilization of solar energy for electricity production and cooperate with his law office. According to the letter, the total cost of his customers’ storage systems is estimated at 135,616,000 euros and the sponsorship (if their proposal to cover approximately 45% of the eligible costs is accepted) will amount to 60 million euros. In his letter he also criticizes the Electricity Authority’s announcement to install a storage system at the Dhekelia station.

Politis reported that the list of usurpers of Greek Cypriot properties includes an American company (DND HOMES) and its subsidiary, based in occupied Famagusta. It promises on its website to bring the quality of America to (occupied) Cyprus. DND HOMES is active, beyond the occupied territories which it calls the “Turkish Republic of Northern Cyprus”, in Boston. The Authorities are aware for some time about its activities.

Philenews reported that left-wing opposition AKEL party has encountered renewed resistance to its proposed taxation of banks’ excess profits stemming from increased interest rates.

The proposal was rebuffed by the executive branch, the Central Bank and the Association of Banks during a parliamentary finance committee meeting.

The bill, suggests imposing a 5% extraordinary solidarity levy on banks, with proceeds earmarked for a Social Solidarity and Borrower Support Fund.

The Director General of the Ministry of Finance, expressed reservations about the bill, warning it could undermine the country’s credibility and deter investors.

A Law Office representative identified constitutional issues with the bill, arguing that levy imposition and fund operation should be managed by the executive branch.

A representative of the Association of Banks stated that banks have paid €400 million in special taxes over the past four years.

07/10/24

Cyprus’s economic outlook remains positive despite a climate of significant uncertainty, Finance Minister Makis Keravnos stated on the 02/10/24 after submitting the state budget for 2025 to House Speaker Annita Dimitriou.

The 2025 budget, totalling €10.2 billion, projects a surplus of 3.3% and a primary surplus of 4.8%.

Keravnos noted that public debt is expected to decrease to 64.2% in 2025 and further to 58.1% in 2026, with the aim of reducing it below 60%.

All expenditures, including developmental, capital, transfers, and social benefits, have increased.

Two Hungarian women were arrested last week on suspicion of involvement in the usurpation of land belonging to Greek Cypriots in the occupied areas.

Large technology companies operating in Cyprus have pointed out that prices of office space in Cyprus and especially in Limassol are in some cases higher than in London and Amsterdam, with this issue being presented as one of the obstacles to the further growth of the IT & ICT sectors, which have seen rapid growth in recent years.

An op-ed by ex-President of DISY Averof Neophytou concludes that the long period of economic insecurity society is experiencing requires bold political initiatives that should be centered on a bold tax reform. Only in this way will the middle class be able to raise its head, respond to the difficulties created by high prices and face the future with optimism and creativity. As long as the middle class cannot “breathe”, the future of the country will remain uncertain. (My note: his numerous political interventions might be an indication of preparation for the next Presidential election).

An op-ed by Leslie G Manison (former senior economist at the International Monetary Fund, an ex-advisor in the Cyprus finance ministry and a former senior advisor at the Central Bank of Cyprus) concludes that with the government focused primarily on GDP growth and on budgetary surpluses in assessing the performance of the economy and in its policy decisions, while giving minute consideration to the deteriorating well-being of many of its citizens.

26/09/24

The Ministry of Environment and Energy of Greece has filed to Greek Parliament the amendment that includes the arrangement for the equal sharing of geopolitical risk between Greece and Cyprus, for the Great Sea Interconnector.

The regulation is included in the draft law of the Ministry of National Economy on public investments, ” which is scheduled to be voted in Parliament today.

To resume offshore surveys and advance construction of the cable, the two regulatory authorities will need to revise the Joint Decision on Cross-Border Project Cost Allocation (CBCA). This must be completed by Monday, September 30, in order for ADMIE to send Nexans the “Full Notice to Proceed”, with which it will be definitively committed to the obligations deriving from the contract amounting to 1.4 billion euros.

The government announced it would terminate electricity subsidies and reinstate VAT on 11 product categories from October, citing reduced inflation and energy costs as reasons for ending these cost-of-living support measures.

25/09/24

Philenews reported (from Capital.gr) that Greek and Cypriot energy regulators have approved €550 million in recoverable revenues 2024-2025 for the implementor of the Interconnector, clearing a major regulatory obstacle.

The implementor was asking for 48 million euros concerning expenses made by the previous owner of the project (EuroAsia) but the two regulators agreed to allow ADMIE to recover only 12 million euros. Recoverable costs of €287m for 2023-24 and €201m for 2025 were approved for the construction of the cable. For the voltage conversion stations , recoverable costs were approved, for 2025, amounting to 47.5 million euros, It is currently estimated that the voltage conversion station project will cost 375 million euros.

This decision paves the way to issue a full notice to proceed to cable manufacturer Nexans.

The €550 million will be recovered over 35 years, with Cyprus covering 63% of expenses and Greece 37%.

Under the agreement, Cyprus will pay €125 million by 2029, with the remainder to be collected gradually after the interconnection becomes operational. Greece’s expense recovery is set to begin in 2025.

With the regulatory framework and economic viability now established, attention has shifted to attracting investors for the project, which has already garnered significant international interest.

The United Arab Emirates, through energy firm TAQA, has expressed interest following a memorandum of understanding (MoU) signed between IPTO and Cyprus last year.

Discussions are underway for the creation of a joint Cypriot-Emirati company to participate in the interconnection’s share capital.

France has also shown keen interest, with infrastructure specialist Meridiam signing an MoU with the implementor in June regarding potential entry into the project’s shareholding.

The US state fund DFC has indicated its intent to acquire a 10% stake in the project, while Qatar has also been mentioned as a potential investor.

ADMIE is expected to launch an open call for investors in the coming months, with the project’s economic and geostrategic importance potentially attracting additional interest.

One of the issues discussed between Prime Minister of Greece Kyriakos Mitsotakis, President of France Emmanuel Macron and President Christodoulides, that s met on the sidelines of the 79th UN General Assembly, was the Interconnector.

Kyriakos Mitsotakis and Nikos Christodoulides informed Emmanuel Macron about the progress of the project of that is of European and French interest.

Left-wing opposition AKEL, has raised concerns over potential additional costs to the state stemming from the Vasiliko natural gas terminal project, which could amount to approximately €550 million.

In a letter to the Finance Minister, AKEL’s Parliamentary Representative, Giorgos Loukaides, cited recent media reports that Cyprus may need to repay €220-230 million to European financial institutions by the end of the month. Additionally, the European Commission is demanding the return of a €73 million grant. The letter also highlighted a reported €230 million required to complete land-based works at Vasiliko and resolve issues with the consortium.

These potential costs come on top of the €250 million already paid to the Chinese consortium without the delivery of the floating natural gas regasification unit “Prometheus”.

AKEL expressed further concern about possible additional expenses arising from claims at the London Arbitration Tribunal.

The opposition party also pointed to the indirect costs borne by Cypriot households and businesses through greenhouse gas emissions permits. Since January 2019, €958.5 million has reportedly been spent on these permits.

Loukaides requested confirmation of these figures and sought details on the government’s plans for completing the project, including timelines and potential infrastructure restoration costs.

Cyprus experienced varied price movements across essential consumer goods in August, with 18 basic products showing monthly increases, 25 decreasing, and two categories remaining unchanged, according to the latest Price Observatory report from the Consumer Protection Service.

The inflation rate continued its downward trend, falling to 1.5% in August from 2.1% in July and 2.7% in June. This moderation was attributed to decreases in petroleum products (-1.24%) and electricity (-0.6%), which offset significant increases in the food sector.

Food inflation stood at 2.38% for the January-August 2024 period compared to the previous year, driven by a 4.5% monthly increase in agricultural products and a 6.8% rise year-on-year.

Notable price hikes were observed in vegetables and herbs (41.7% month-on-month) & fresh meat (4.1%).

24/09/24

A video conference call was held on Monday between the respective energy regulators of Cyprus and Greece and the project promoter for the electricity connector.

The object of the call was to discuss Admie’s proposal for its expenditures going forward (capital expenditures and its operating costs for the years 2024 and 2025).

The talks follow a memorandum of understanding agreed, green-lighting the electricity interconnector.

Energy Minister George Papanastasiou said the talks were part of the standard process & any expenditures the promoter makes need the ok from the regulators.

Asked about the participation of the Cypriot state itself as a shareholder in the project, he said the matter is still under consideration.

Philenews reported that the regulators have approved approximately 550 million euros in recoverable expenses, covering the 2024-2025 period.

These expenses do not constitute immediate revenue and full cost recovery will occur over 35 years.

Cyprus is expected to begin reimbursing by late 2025 or early 2026, starting with 25 million euros. The government has committed to providing 125 million euros by 2029, with remaining costs to be gradually recovered from Cypriot consumers once the interconnection becomes operational. Greek consumers will contribute to expense recovery from 1 January 2025 through a special charge. Under the cross-border cost allocation agreement, Cyprus will cover 63% of the expenses, with Greece responsible for the remaining 37%.

A delegation of United Arab Emirates’ company Taqa has reaffirmed its interest in participating in the Great Sea Interconnector.

The delegation met with President Nikos Christodoulides on the sidelines of the UN general assembly.

Christodoulides and Taqa agreed their delegations would be meeting over the next few weeks to draft a roadmap on the next steps.

In a recent interview, Christodoulides revealed that advanced consultations were underway to establish a joint company with the UAE for participation in the electrical interconnection’s share capital.

This development builds on a Memorandum of Understanding signed last December between Cyprus’s Ministry of Energy, Greek power grid operator ADMIE, and TAQA to promote investments in the Cyprus-Crete electrical interconnection.

EU member states share common goals of achieving climate neutrality and ensuring a sustainable, secure and affordable energy future, Energy Minister George Papanastasiou said at the opening of the 2nd MED9 ministerial meeting on energy.

The conference, taking place in Larnaca, welcomed energy ministers and representatives from Mediterranean EU countries.

He added that the region is uniquely positioned at the crossroads of Europe, Africa and the Middle East, making it a vital hub for energy cooperation and innovation.

The summit, he said, is an opportunity to exchange views and strengthen commitment to a greener and more sustainable energy landscape.

Philenews reported that police have referred a multi-million euro fraud complaint against a Greek Cypriot businessman to its Crime Combating Department (due to its complexity).

The case initially reported to Larnaca Police in early September, involves allegations of a €3 million fraud targeting Israeli investors in a property development scheme.

According to the complainants, the businessman, active in real estate, allegedly obtained funds from Israeli investors under false pretences for a land purchase in Larnaca that never materialised. The investors claim the money was diverted to other projects.

The fraud allegedly involved an escrow account in Israel, with funds to be released upon receipt of certificates from the Larnaca Land Registry department. The investors’ lawyer alleges these documents were forged.

Allegations include the businessman submitting and subsequently cancelling property sale documents at the Land Registry to obtain receipts for investor payments, as well as altering documents for tax purposes.

President Nikos Christodoulides appointed Andreas Papaconstantinou as the new Auditor General replacing Odysseas Michaelides who was removed from office last week.

He is a Certified Auditor and an Certified Internal Auditor with experience both in the private and the public sector.

The Cyprus Chamber of Commerce and Industry (Keve) and Invest Cyprus on Monday co-organised a forum that sought to promote the island as a place through which Lebanese businesses can gain access to the European Union.

The president of the Chamber welcomed the business delegation from the French-Lebanese Chamber of Commerce and Industry & pointed out the potential for trilateral cooperation between Cyprus, France and Lebanon.

There was also a presentation from the Deputy Minister of Research, Innovation, and Digital Policy and B-to-B meetings.

An op-ed by Les Manison (former senior economist at the International Monetary Fund, an ex-advisor in the Cyprus finance ministry and a former senior advisor at the Central Bank of Cyprus) notes that Cyprus has seen five natural gas discoveries since 2011 but none have been developed despite the presence of major energy. A major problem is the inability of Cyprus institutions to arrange and implement viable projects-Cyprus has weak institutions. The government has not been able to design an overall detailed energy plan and seems to bow to the pressures of politicians and special interest groups. There is a need to create an independent institution to study and evaluate the economic viability and risks of major projects. The poor relations of Cyprus with Turkey and the failure to resolve between them the dispute on what is the exclusive economic zone of the island, which contributes to the delay in efforts to exploit natural gas deposits and draft firm plans for the distribution of energy from and to Cyprus.

23/09/24

A Framework of Understanding between Cyprus and Greece, for the promotion of the Cyprus-Crete Electricity Interconnection, was signed between the Minister of Energy, Trade and Industry of Cyprus and the Minister of Environment and Energy of Greece last Friday.

Based on this Framework, and following the relevant decisions of the Regulatory Authorities of the two countries, the project is expected to restart in the next few days. 

The announcement notes that the Interconnection will contribute to the removal of Cyprus’ energy isolation.

Philenews reported about an interstate agreement. It notes the agreement was signed after a decision by the Cyprus Energy Regulatory Authority to change the regulatory framework last Friday. CERA adopted two changes. 1. The start of cost recovery from the implementing body from 2025 until 2029, with 25 million euros per year, which will be deducted from consumers but will be returned to them with a state subsidy, which will be made available through electricity bills. 2. The granting of a preferential rate of capital return (8.3%) to the implementing body is extended for 17 years. In the final text of the interstate agreement, there is reference to the changes made by CERA & the remaining decisions that must be taken by the regulators to amend the cross-border cost sharing (CBCA). In particular, the regulators are bound by the agreement to redefine the 50-50 of the assumption of costs by consumers in Cyprus and Greece, in case the project is aborted by an external factor or incident, without the responsibility of the implementing body. The current distribution is 63 for Cyprus and 37 for Greece. The amendment of the CBCA will take place after legislation is passed by the Greek Parliament, according to which the additional – possible – cost for consumers in Greece (13%) will be financed by the Greek State and not directly by electricity consumers. The request submitted by the Cypriot side for a 50-50 division of the potentially higher cost of the project, over the budgeted 1.94 billion, was not accepted by the Greek side and is not included in the agreement. Regarding the participation of Cyprus in the share structure of the Great Sea Interconnector, with 100 million euros, it is mentioned that the final investment decision will be taken after the due diligence study that will be launched by the Cypriot Government.

Almost all of the implementor’s requests have been satisfied but it has not yet made the final commitment to the cable manufacturer and warns that he will not do so unless the regulators approve its recoverable expenses for 2024 and 2025.

ADMIE lobbied hard last week to secure approval from the two regulators, but its claim was not met.

However, it is possible that this will be done today, during a teleconference.

One of the claims the regulators authorities are not willing to approve are the 48 million euros that was paid to EuroAsia Interconnector to purchase the interconnection project. Other requests for smaller amounts remain under evaluation.

The pressures exerted by the ADMIE on the two regulatory authorities, which are often accompanied by ultimatums, are deeply troubling, as they foreshadow continuous confrontations and disagreements in the coming years.

President Christodoulides spoke with his French counterpart Emmanuel Macron informing him about progress with regards to the interconnector in the context of French cable laying company Nexans’ participation in the project. Both agreed to hold an in-person meeting with Greek Prime Minister Kyriakos Mitsotakis on the sidelines of the United Nations General Assembly. Philenews reported that according to sources, the recent discussions between Christodoulides and the Greek Prime Minister highlighted that while the Interconnector project is a significant investment for Greece, its primary beneficiary would be Cyprus. The energy link is seen as crucial in ensuring Cyprus’s energy independence and avoiding reliance on Turkey. From Greece’s perspective, the project is politically and economically important, although technically unnecessary for the mainland.

Cyprus is in “advanced consultations” with the United Arab Emirates regarding the establishment of a joint company to participate in the share capital of the Great Sea Interconnector, President Nikos Christodoulides said. He added that there is “also interest” on the part of the United States and Qatar. On the potential involvement of the UAE, the US or Qatar, he was asked whether those countries will also be allies of Cyprus and Greece in the event of a threat from Turkey. He answered, “certainly, when they invest in such a project, they are also directly interested in the implementation of the project. The sovereign rights of the Republic of Cyprus and the Hellenic Republic will not be called into question. The project in question is subsidised to a very large extent by the European Union itself. It is a project of common benefit of the European Union. Neither Greece nor Cyprus are questioning our own sovereign rights, nor do we accept the Turkish claims.”

Philenews reported that the discussions specifically concern cooperation with UAE state-owned company TAQA. In December 2023 a Memorandum of Understanding (MoU) was signed with TAQA, together with the Independent Energy Transmission Operator of Greece (ADMIE), to promote investments in the Cyprus-Crete electricity interconnection. The cooperation between the two parties is necessary as TAQA’s investment alone in the electricity interconnection stumbles on the EU acquis, as the UAE state-owned company has huge investments in the generation and supply of electricity in EU countries and elsewhere. The Cyprus – UAE cooperation is likely to be done through a special purpose company, which will invest with a very significant percentage of shares in the Great Sea Interconnector. The Republic of Cyprus will participate with 100 million euros. The President of the Republic also pointed out the importance of the electrical interconnection project contracts, stating that a part of the project has not yet been signed (according to Philenews this is for the voltage conversion stations from Siemens) and the first drafts are awaited.

The European Investment Bank (EIB) is still open to investing in the electricity interconnector project between Cyprus and Greece, its Vice President Kyriacos Kakouris said. He stressed the project for the Great Sea Interconnector still needs to be evaluated, primarily from a technical viewpoint to assess its validity for loan. Nonetheless, answers should be ready soon & the EIB would be offering its official response much earlier than the end of the year. He specified the results will determine the final investment decision of the Republic of Cyprus to take on a share of capital.

Ex-Presidential candidate Andeas Mavroyiannis in an article noted that as regards the Interconnector, clear answer are needed to important questions. Some things have not been answered such as which other countries will participate and why has Israel who was a key part of the original planning not made any commitment? The project involves governments and public authorities and transfers the cost and risk to the citizen and the consumer. Ideally, and if economic viability is ensured, the whole project should been undertaken by private investors with the public sector limited to the creation of the appropriate institutional framework, the resolution of the legal issues and dealing with the geopolitical risk. The fragile situation in the region is also an issue.

Strengthening energy cooperation between the Med9 countries and promoting green energy will be the focus of this week’s ministerial meeting in Cyprus. Energy ministers from the alliance of nine Mediterranean and southern European EU member states, namely Croatia, Cyprus, France, Greece, Italy, Malta, Portugal, Slovenia and Spain will be meeting on September 23, in the framework of Cyprus’ presidency of the Med9.

The Turkish Minister of Energy, Alparslan Bayraktar, stated that their current operations are in the Black Sea but they will return to the Mediterranean.

Philenews reported that a serious fraud case of international dimensions by a Greek Cypriot businessman with activities in the real estate sector is being examined by the Cyprus Police. Complainants in the case are Israeli investors. The complaint, according to info., was officially made in the first week of September through an Israeli lawyer. The businessman is accused of securing large sums of money from investors with false representations. More specifically, the Greek Cypriot presented fake receipts related to actions with the Land Registry of Larnaca, so that the funds of the Israeli investors were released and came into his possession. However, as the complainants claim, not only was the money not allocated for the purpose of the investment, it was used by the entrepreneur for other projects. The complaining persons are four, while the total amount they claim was extracted from them with false representations reaches 3 million euros.

The Republic of Cyprus and the occupied north both expressed overall satisfaction with the Council of Europe’s committee of ministers’ decisions regarding developments related to the use of and compensation paid for Greek Cypriot-owned property in the north.

The Republics’ foreign ministry described them as “positive developments”, which “reaffirm that the violations of property rights identified by the [ECtHR], regarding the illegal use and exploitation of Greek Cypriot properties by Turkey in the occupied areas, continue to exist.” the north’s ‘foreign ministry’ focused on a specific  case, saying that the IPC, that has been established in the north, is an effective domestic remedy.”.

Philenews reported that foreign nationals accused of land seizure are selling their properties and leaving the occupied territories of Cyprus, driven by investment insecurity following crackdowns by the Cypriot authorities.

Among those arrested are a Turkish-Jewish businessman and a German national, both facing charges of land seizure. More arrests are anticipated.

This growing insecurity is reshaping the economic landscape of the occupied areas, which is experiencing significant pressure. Reports indicate that the majority of those fleeing are Russians, Ukrainians, and Israelis involved in substantial investments. Properties are being sold primarily to Turkish buyers, a trend that suggests Turkish officials are encouraging local investors to purchase Greek Cypriot properties from foreign nationals.

Finance Minister Makis Keravnos hailed rating agency Morningstar DBRS’ decision to give Cyprus a credit rating of BBB (high) and upgrade the island’s outlook from “stable” to “positive”.

Morningstar DBRS based their assessment of Cyprus on the reduction of its public debt, with the country’s public debt as a percentage of gross domestic product (GDP) falling from 99.3 per cent in 2021 to 77.4 per cent in 2023.

According to Morningstar DBRS, growth likely to continue to benefit from strong private consumption, rising services exports, and strong construction investment in the coming years.

Philenews reported that there has been a recent increase in registrations in the relevant registry of premises rented through the internet and platforms like Airbnb. Registration in the registry of the Deputy Minister of Tourism is mandatory by law, so that these properties can be advertised and, consequently, made available for short-term rental. However, a significant number of such properties continue to remain outside the registry. According to some estimates, around half of the accommodations advertised on various platforms, which some estimates put at around 15,000, are not registered.

17/09/24

The cabinet may (not verified) continue discussing the Great Sea Interconnector, with reports noting the government is now grappling with the issue of whether the Cypriot state will become an equity stakeholder in the company running the project.

But even if it is discussed at the cabinet meeting, it is unclear if any decisions would be made. It is also possible that only certain issues may be decided upon.

Philenews reported that the direct government financing of 25 million euros annually from 2025-2029 to recover implementation costs & extending the concession period for an 8.3% return on capital to the implementing body from 12 to 17 years may be approved today.

The ratio between the two countries for the provision of a geopolitical guarantee for the security of the project will be 50-50 has also been given the green light from Greece.

Media reports said a major pending issue relates to the Cypriot state’s participation in the holding company that would be established to run the interconnector project (up to €100 million –30 per cent of the shares). The govt. seems unready to decide this now so as not be criticized that it did not wait for the cost-benefit evaluation while the process of buying shares is time consuming also.

The government has twice invited tenders for a consultancy that would be tasked with assessing the cost-benefit analysis. To date, only one consulting firm DNV (Norway) has responded.

Philenews reported that the “hole” in the Vassiliko terminal project, the work on which was terminated a few months ago and a compensation claim process is ongoing at the Arbitration Court, is worrying the Ministry of Finance.

The state may be asked to put up to €500 to €600 million.

The Minister of Finance Makis Keravnos met with representatives of the coalition parties DIKO, EDEK and DIPA and informed them about the 2025 budget as well as the forecasts and fiscal risks with the which the economy may face. Despite the positive rates of the economy and the rise of economic indicators, the developments at the Vasilikos terminal are worrying. According to information, the additional costs that will arise for the Republic from the project in Vasiliko, as analyzed  by the Minister of Finance are as follows:

• By the end of the month, the Republic will have to return to the European Investment Bank or the European Bank for Reconstruction and Development a total amount of €220 to €230 million. This is money that was given as a loan for the project, with the Republic as guarantor.
• The European Commission demanded from the Cypriot authorities the return of €73 million, which it gave to the country as a sponsorship (out of a total of €101 million) for the construction of the project.
• It is estimated that another €230 million will be needed for the completion of the works on land in Vasilikos (pier and other infrastructure), as well as for other pending matters with the consortium.

The state has a reserve to cover the additional costs, through the surplus,

Regarding the budget for 2025, it is expected to be submitted to the Council of Ministers next Friday. The growth rate in 2025 will be around 4%, inflation around 2% and unemployment at 5%. Regarding the public debt, it is estimated to be 64% of GDP.

The transport minister has been fiercely criticized by yacht owners at the Larnaca marina, who are demanding a reduction in berthing fees and charges, following the termination of the agreement with Kition Ocean Holdings.

The reason are statements he made, comparing the marina to the rest of the marinas in the Republic, as well as some in Greece, as the one with the lowest fees.

Foreign investors in Cyprus are increasingly shifting their focus from luxury properties to more affordable housing, driven by a desire for residency permits rather than citizenship.

This shift, according to a report from real estate firm Danos, marks a significant change in the market dynamics. Geopolitical factors, particularly tensions in the Middle East, are expected to sustain interest from foreign buyers, especially from Europe and Asia.  

Despite the challenges of rising construction costs and new regulatory changes, foreign investors continue to show strong interest in Cypriot real estate.

The Cyprus Residency Programme, also known as the ‘golden visa’, remains a significant driver of foreign investment, offering residency permits to non-European citizens who invest in Cypriot real estate.  

A team of financial experts from the US Department of the Treasury’s Internal Revenue Service Criminal Investigation (IRS-CI), are in Cyprus to meet with counterparts from the Ministries of Finance, Justice, and the Cyprus National Police.

They will discuss emerging money laundering tactics and other financial crimes affecting both countries.

Cyprus’ competition watchdog has ruled that competition in the country’s banking market remains healthy, approving Eurobank’s acquisition of a 26.1 per cent stake in Hellenic Bank.

With the transaction, Eurobank now controls 55.3 per cent of Hellenic Bank shares.

The Commission for the Protection of Competition’s (CPC) decision was approved by a narrow 3-2 vote.

Philenews reported that while the construction of the new Paphos-Polis Chrysochous highway has faced delays, the project’s impact on land values and property prices is becoming increasingly central to discussions.

It is estimated that land values in areas close to the highway route will skyrocket.

The project involves the design and construction of a two-lane road initially from, with a length of 15.5 km and a cost of €86,845,010 (incl. VAT).

16/09/24

Sigmalive reported that consultations continue between Greece and Cyprus with the aim of reaching a final agreement on the matter of the Great Sea Interconnector.

Developments are expected in the next few days. The meeting of the President with the Greek Prime Minister on September 19, in Athens, is also considered an important milestone.

Due to the continuation of the discussions, the Minister of Energy, Trade and Industry canceled his trip to the USA, where he was scheduled to go to an energy exhibition.

According to information cited by Greek Economic Tahidromos, the agreement reached by Athens and Nicosia during the meeting last Tuesday provides for three things.

1. That ADMIE recovers revenues of 125 million euros, instead of 200 million euros, during the construction period.

The Cypriot side maintains that this cost will be covered by emission revenues, while the rest of the revenues that ADMIE is entitled to will be covered upon the start of operation of the electrical interconnection.

2. For the Republic of Cyprus to become a shareholder in the electrical interconnection Great Sea Interconnector.

Today, the sole shareholder is ADMIE. Based on the agreement, Nicosia will enter the share capital with 100 million euros.

3. That Greece increases the percentage of the geopolitical guarantee for the implementation of the Greece – Cyprus cable project.

According to information, the ratio between the two countries for the provision of a geopolitical guarantee for the security of the project will be 50-50.

Philenews reported that government officials and technocrats are rushing into an overloaded current of coordination in their attempt to finalise the changes in the document that will make up the framework of the electricity connection between Greece and Cyprus.

Sources say that the Energy Ministry will submit a final script for approval on Tuesday September 17th, during the next scheduled Cabinet meeting.

It all points to an arrangement where the government’s request that the countries equally share of the cost of possible project failure has now been accepted by Athens.

The sticking point is the budgeted cost of the electricity connection. The Energy minister seems to share expert concerns that the cost is unlikely to remain sub two billion and has requested a number of guarantees in the eventuality that these fears are realised.

In case the work is extended beyond 2030, it is understood that neither the state nor the public will be called upon to cover any additional cost of implementation expenses..

The project will be high on the agenda of talks between President Christodoulides and Prime Minister Mitsotakis in Athens next Thursday & a final agreement document should be in place, at least approved by the Cypriot side.

According to info., the conclusion of the consultations between the Cypriot Government with the Greek Government and ADMIE is now stumbling on the strong desire of the Greek side to close within the week also the issue of the participation of Cyprusin the share capital of Great Sea Interconnector, with 100 million euros and approximately 30% of the shares.

ADMIE believes that if the Cypriot Government announces its decision to acquire a significant percentage of shares, it will send investors and financiers the message that the Republic of Cyprus fully supports the project & will work beneficially for profitability and financing. There is also a pending request for a loan of around 500 million euros from the European Investment Bank (EIB). The Presidency of the Republic considers that it cannot deviate from its commitment to take a decision only after the evaluation studies. But as it this may take time the Greek side is pushing for the issue to close possibly through the Cyprus Transmission System Operator. According to info., the Presidency favors the issuance tomorrow of a decision that will make even clearer and stronger its interest in buying equity but on the other hand it wants to give time to the evaluation studies to decide on the viability of the project, before making its binding decision.

Philenews (Andreas Bimbishis) reported that Emirati TAQA’s participation in the Great Sea Interconnector was at the center of talks held by President Christodoulidis in the United Arab Emirates last Wednesday.

Government circles contacted by Philenews noted the importance of the talks while underlining the involvement of Abu Dhabi’s national energy company (TAQA).

Nicosia notes the UAE’s interest in the specific project, while underlining that the trip to the Gulf state came at a pivotal point in the GSI discussions. There is also a positive sign regarding the diplomatic aspect of the whole matter considering that similar meetings with the leadership of the UAE are not an easy task. Last December, a memorandum of understanding was signed between the Ministry of Energy, ADMIE and TAQA for cooperation in the electrical interconnection of Cyprus, Greece and Israel.

The purpose of the memorandum is for the Ministry and TAQA to engage in discussions with ADMIE, so as to study the possibility of participating in the share capital of the new company that will take over as the Implementation Agency of the project.

It is foreseen that an advisory committee will be set up which will meet twice a month and which will be attended by two members from each side and an additional person from ADMIE.

The ‘so-called transport minister’ Ethan Arikli of the occupied North said that not only the requests for direct flights, direct trade and direct contacts, but also the electrical interconnection by cable with Turkey, should be set as a condition for the resumption of talks in the Cyprus issue. 

MEP Kostas Mavrides (DIKO – S&D) has questioned the European Commission about the legality of a clause in a 2016 agreement concerning Cyprus’s ports.

The clause, part of a deal for private management of Limassol port, requires state compensation if commercial activities at Larnaca port exceed 900,000 tonnes annually.

Mavrides revealed that in 2023 alone, €3.354 million was paid to the managing company under this provision.

He argued that this arrangement not only fails to serve the public interest but also restricts the growth of the Larnaca port’s operations.

The MEP highlighted that Cypriot authorities, including the Audit Office, Law Office, and Commissioner of State Aid Control, had previously expressed reservations about the clause.

He asked the Commission to clarify whether the clause violates EU state aid and competition laws.

The EU’s anti-fraud office (Olaf) is investigating Cyprus’ fisheries department over a tender which the audit service said contained “unacceptable” conditions and cost €1.5 million more that the lowest bidder. The project has also been hit with delays. The matter has also been reported to the anti-corruption authority and transparency commissioner for possible criminal offences including abuse of power.

Olaf’s investigation concerns the purchase of an oil recovery vessel aimed at responding to marine pollution incidents in Cyprus’ exclusive economic zone (EEZ).

Ukrainian oligarch Igor Kolomoisky, a prominent person who was once an ally of President Zelensky, loses his Cypriot citizenship after the authorities of the Republic confirmed that it was obtained by fraud, false representations and concealment of essential facts. The Ministerial Council also revoked the citizenship to seven more people (2 families) who had become Cypriots via the Cyprus investment program.

12/09/24

Minister Eli Cohen posted on social media that he spoke with the Minister of Energy, Trade, and Industry of Cyprus. They underscored the strong relationship and ongoing cooperation between Israel and Cyprus, and  Minister Cohen emphasized the great importance of the “Great Sea Interconnector” project to Israel. The project will connect Israel’s electricity grid to the European one through Cyprus and Greece, and strengthen energy security in the region. This groundbreaking project is a top priority for Israel as it enhances regional energy security, provides access to diverse energy markets and strengthens Israel’s integration into the European energy network.

Discussions regarding the regulatory framework for the Great Sea Interconnector connecting Cyprus to Crete will carry on “for as long as it takes”, deputy government spokesman Yiannis Antoniou said but the government “recognises that time is not unlimited.”

After Tuesday’s roundtable meeting of stakeholders on the matter, discussions would continue “remotely”.

He added that Tuesday’s meeting was “productive and beneficial”, and that the government believes it is “on a good road, on the right road” over the matter.

He said the issues raised included technocratic, technical, economic, and legal matters and that “we want to see [all sides’ positions] converge when it is possible.

“Our central question,” he said, “is over the reduction of energy costs for Cypriot homes and businesses. That is our approach.”

“We do not consider that there is a risk of aborting the interconnector project”, noted the Greek Minister of Foreign Affairs, Giorgos Gerapetritis, in an interview noting its importance and that Greece is very clearly of the opinion that the project will continue normally.

He underlined that the cable will pass through the territorial waters of Greece and Cyprus and through international waters of the Greek EEZ. The laying of cables is absolutely protected by international law.

Asked about the events in Kasos involving Turkey (end of July an Italian vessel carried out surveys for the interconnection project) he said: “The absolute distortion that is being made is that we allegedly recognized claims, which is false. Allegedly there was a crisis, and this is false. Allegedly, the survey has not been completed, and this is false”.

Philenews reported that there are estimates that a compromise for the interconnector is possible in the next few days.

According to info., an agreement satisfactory to both sides could be reached if the Greek Government and ADMIE (implementor) accepted some differentiations that would reduce the costs for Cypriot consumers, in the scenario that the electrical interconnection is interrupted or blocked by unforeseeable factor (force majeure). For its part, the Cypriot Government reportedly remains ready to accept the two basic requests of ADMIE – that the Government and not the electricity consumers directly finance – possible with budget approval by the Parliament – the financing of ADMIE with 25 million euros per year for the five years (2025-29) to recover part of its costs for the execution of the projects and, secondly, extending the preferential rate of capital return of 8.3% to 17 years.

Although information was initially published about the intention of the parties to hold a new teleconference yesterday, it seems it did not take place. But there is a possibility it may happen either today or very soon.

Edek socialist party called on the government to convene a meeting with political parties over the Great Sea Interconnector so as to form a national policy on the matter.

With this in mind, it set out its stall on the issue, saying Cyprus should instead “focus on the arrival of natural gas” and that it was “problematic” that the Greek government is “insisting that it be implemented … without any step being taken between Greece and Cyprus to delimit the two countries’ exclusive economic zones (EEZ).”

An op-ed in Philenews noted that the President left this crucial meeting on the interconnector to attend a book presentation. The President’s choice clearly demonstrates a politician whose sense of the seriousness of issues is illogical. And that, of course, is very dangerous for any political leader. When a President abandons a meeting of utmost national interest to attend a book presentation, where his presence serves more to bolster his public relations than anything else, then that so-called leader proves to be utterly inadequate.

Shimon Aykut, who was arrested in early June facing charges related to usurpation of property in the occupied territories, will remain in custody until September 27

Explaining its rationale, the Court ruled that there is a risk of the accused fleeing justice as there is a visible possibility (based on witness material put before it, the seriousness of the offences and the possible jail term) of conviction.  In its decision the court also noted that any reasonable expectation of acquittal is not/cannot be excluded.

President Christodoulides met with President of the United Arab Emirates Sheikh Mohamed bin Zayed Al Nahyan where they discussed cooperation in energy and infrastructure.

US sanctions imposed on entities and individuals in Cyprus are not targeting the country but oligarchs and arms traders that enable Russia to continue waging its war in Ukraine, US Ambassador to Cyprus Julie Fisher said.

She was addressing the Sanctions and Export Controls: Best Practices seminar, which brought together representatives from the Central Bank of Cyprus, compliance officers of the Cyprus banking sector and officials from the US Treasury, Justice and State Departments.

The Supreme Constitutional Court rejected an appeal filed by a Syrian businessman against the revocation of his Cypriot citizenship after his name had appeared on a European Union list of financiers of Syrian President Bashar al-Assad.

The man is also one of Assad’s cousins.

He had applied for Cypriot citizenship for himself, his wife and their four sons in 2009 under the country’s citizenship through investment programme, commonly known as the ‘golden passport’ scheme.

Meanwhile, one of the richest people in the world, Miroslav Miskovic remains a Cypriot after a recent decision by the Council of Ministers to revoke an earlier decision in 2021.

He was previously acquitted by the Court of Appeal in Belgrade for a tax evasion case in which he was convicted and on which the Republic of Cyprus relied to start the process of depriving him of the citizenship he had acquired in 2012.

Philenews reported that the Republic is expected to soon shake hands with Hermes Airports, which is the managing company of Larnaca and Paphos airports, in relation to the second phase of construction of the infrastructure projects at the two airports and the extension of its management.

The Cyprus Shipping Chamber (CSC) participated at a recent meeting of the International Chamber of Shipping (ICS) in London.

The event involved discussions on numerous issues, including the attacks on ships in the Red Sea and the Gulf of Aden, along with developments concerning emissions reduction targets.

The Bank of Cyprus is studying the divestment (partial or full) from JCC Payment Systems Ltd, in which it holds the largest percentage of participation (75%). Euronet Worldwide Inc, listed on the NASDAQ stock exchange, is listed as an interested buyer.

11/09/24

A crucial meeting was held yesterday at the presidential palace on the interconnector issue.

Cyprus’ ministers of energy and finance, as well as representatives of the legal service attended as also Greece’s energy minister, a representative of the EU commission, cable producer Nexans and Greece’s independent power transmission system operator (Admie).

Media reported that the only positive information made public after the meeting was the assurances given by the President of the Republic and the Ministers of Energy of Cyprus and Greece that the contacts will continue in the coming days.

The Deputy govt. spokesperson said that no one wants the dialogue to collapse. There are issues that need further processing and additional information is expected. The outline has been set and now at the level of technocrats other data will be exchanged so that a decision can be made at a political level. The time frame is not unlimited but the schedule is also not ‘suffocating’ in the sense and image that was created in the previous days.

Philenews reported that it should not be ruled out, due to the seriousness of the matter and the side effects that the final decisions on the energy future of Cyprus will have, that President Christodoulidis chooses to inform the political leadership, in order to record the their positions before finalizing his own decision. Other media reports said Cyprus is considering asking the European Commission to raise its pledged grant of €657 million – accounting for about a third of the project’s total cost – by another €200 million. This is because the €657 million had been pledged at a time when the project was costed at €1.4 billion; by contrast the latest estimates place the price tag at €1.9 billion.

An op-ed in Politis entitled “Israel needs to enter” notes recent statements of the CEO of the Interconnector implementor who stated the importance of interconnection also with Israel. If the issue was trilateral there would be no discussion of geopolitical risk or viability. It is not trilateral

and like Israel usually does, it is absent. In the big plans, such as natural gas finds in the East Med. and the interconnector project, Israel appears to lead things but then disappears. One could mention the war but this tendency existed. While discussing the idea of a terminal in Cyprus, Israel proceeded with its own plans for Tamar and Leviathan. Today, while the logic of the cable was to connect Europe with Asia via Israel, hence the first name was Asia Interconnector, the Israelis have disappeared from the project and we are talking about a cable from Cyprus to Crete. What’s going on? How will the cable lead to an electrical interconnection with Saudi Arabia that will move forward in the coming months, according to the CEO? What is certain is that these projects can make it possible to transfer huge amounts of “green” energy from the Mediterranean to central Europe, where the major consumption centers are located. This will be mutually beneficial for all economies involved, as long as everyone remains firmly focused on the big picture. If they are team players and don’t only see their own interests.

The United States Ambassador to Cyprus, Julie Fisher, reiterated yesterday that the electrical interconnection between Greece and Cyprus is an important opportunity for Cyprus.

The Employers and Industrialists Federation (OEV) stressed that the sustainable electricity interconnection must be a project which is of European co-ownership and, as such, entitled to European geopolitical safeguards.

“The project must, with reliable independent studies, begin and finish without dramatic, for the economy, overruns in the estimated costs, with the introduction of caps on the financial exposure of the state,”.

Politis reported that the debate on the Cyprus-Greece electricity interconnection has again brought to the fore the issue of the large profit of electricity production companies, from Renewable Energy Sources (RES). There are more voices raising the issue of excess profits and also suspicions that the Great Sea Interconnector may also impinge on their interests

The Cyprus Mail reported that management of the Karpaz Gate Marina near the occupied village of Ayia Triada in the Karpas peninsula has been transferred out of Israeli hands and put under the operation of Turkish Cypriot Arkin group.

New investments into the marina will now be made exclusively by the Arkin group.

The Karpaz Gate Marina first opened in 2011, and cost around €120m to build, and as such constituted the largest Israeli investment in the north – a fact which had caused concern in Turkey and among some Turkish Cypriots, though has thus far seen very little traffic.

According to the north’s ‘tourism ministry’, just 113 people arrived at the Karpaz Gate Marina from abroad in the first seven months of the year.

The Cyprus Mail reported that a court will convene today to decide whether Simon Aykut will be held until his trial or released on bail.

Aykut, 73, is being tried for developing on over €43 million worth of Greek Cypriot land in the north through his company Duminka part of the Afik group.

During a hearing on Tuesday, the court heard from the prosecutor that based on testimony he needs to remain in custody until the trial is complete.

The defence attempted to refute the prosecution’s case.

The Cyprus Mail reported that no investment has been made in the occupied north’s ports “in 100 years”, the north’s ‘transport minister’ Erhan Arikli said.

The north’s cabinet had approved a bill to privatise both ports, but that has met with problems.

Arikli pointed out that the decision to privatise the ports had initially been made in 2001, but that the necessary funds to do this had never been allocated.

He also claimed that a company by the name of Salamis Port Shipping Ltd had “pressured for the handling tender to not be an international tender” – a point upon which he had insisted, event to the point of withdrawing his party’s support for the ‘government’.

10/09/24

Philenews reported that the more the authorities study the existing agreements and regulatory decisions for the Cyprus-Crete electricity interconnection, the more they worry about dozens of gray areas, as well as potential pitfalls.

Today, the President of the Republic is attending the meeting he called with all the interested parties, but he is going more to ask and claim, than to shake hands for an agreement.

The absence of any commitment for the final cost of the interconnection, the delivery time of the project, but also the damage that will be borne by the consumers in the event of interruption of the project for reasons of force majeure, are the biggest concerns of the Government.

A big problem is caused by the attitude of the investors/implementor (ADMIE) and the Greek Government (it owns 51% of the shares of ADMIE), who, while demanding that the changes they demand in the regulatory framework be made, in order to further ensure their financial interests, refuse to discuss changes requested by the Cypriot Government in the framework, accusing it of withdrawing from the original agreements.

Under these circumstances, the chances of an agreement being reached during the afternoon meeting are not a lot.

From the side of the govt. a great effort is being made to identify possible risks (financial and other) for the state and consumers, in the regulatory decisions already taken by CERA and binding on both sides. The Government insists on finding a formula that will protect consumers and the economy, in case the costs for the interconnection increase beyond the 1.94 billion budgeted. the Government also does not accept the request of ADMIE to change the wording related to the compensation of the implementing body in case of interruption of the project without its own responsibility. On the contrary, the Government (and the Attorney General) now consider that the specific wording in the regulatory framework ( “may”) is insufficient for the country’s interests and must be amended. Financing the project with 125 million euros is acceptable as also extending the preferential rate of capital return of 8.3% to 17 years.

The Great Sea Interconnector (GSI) is both technically and financially viable and must go ahead, former finance minister and Disy MP Harris Georgiades said.

According to the MP, the project’s benefit is clear and it should progress. It is unthinkable to derail a project for which construction has already started, and which had already been assessed and approved by the EU. “We cannot blow up this historic opportunity and remain isolated,”

Much has been made over the issue of geopolitical risk, he said, but in the event of Turkish aggression, Greek consumers would also be liable for almost 40 per cent (37 per cent) of the fallout. And the EU would never have earmarked €657 million in subsidies for a project which was unfeasible or unworthy of the well-assessed geopolitical risk.

As for the project perhaps not bringing down electricity prices or, conversely, becoming a monopoly precisely due to its flooding the island with low-cost energy, Georgiades held that such fears were illogical and baseless.

As for concerns over the project’s costs, the €2 billion currently estimated, would be the “absolute max” that would need to be paid out by the state or the consumer.

The electricity authority (EAC) pays €2.5 billion per annum to burning imported fossil fuel he pointed out.

“What the consumer will [directly or indirectly] have to pay, is not the €2 billion but that minus the EU subsidy, minus the 63 per cent to be paid by Greek consumers – and that remainder would be spread out over 35 years,” he said.

The project will be both viable and profitable, Georgiades confidently concluded. The Cypriot consumer would be burdened with a “cost of €30 per year, while saving €150”.

Philenews reported on statements made by the Minister of Foreign Affairs of Greece, Giorgos Gerapetritis.

“I want to be clear. The search, as well as the laying of an electric cable, is permitted and absolutely guaranteed by international law.

The rules of international law absolutely allow the search and laying of an electric cable, and therefore there could be no obstruction by another state.

After all, this proves the fact that the specific project for the electricity interconnection between Greece and Cyprus has been approved by the European Commission, which is known evaluates things very carefully”.

But he did not say, however, why ADMIE is demanding that it be financially guaranteed through the regulatory framework that it will be fully compensated in case the project is wrecked by an external factor.

He also did not say how it is possible for the European Commission, which is supposed to evaluate things very carefully, to make a mistake twice in a very short period of time for projects for which it gives money from the EU budget. Once it gave 657 million euros to a company that could not, as the Commission itself diagnosed afterwards, implement the interconnection and a second time when the studies it approved showed a cost of 1.4 billion which increased to 1.94 billion.

The Greek Minister of Energy stated that the Interconnector will have significant profits for Cypriot consumers.

Philenews reported that a Professor of the Polytechnic School at Frederick University, specializing in sustainable energy issues (Paris Fokaidis) stated that public opinion in Cyprus appears cautious towards the Great Sea Interconnector.

“This reluctance is not unjustified, as there have been several failures in grandiose energy projects in Cyprus. This fact gave the opportunity to domestic lobbies to target the project and create a climate of questioning. These lobbies have found expression in specific politicians and are supported by specific media, cultivating a climate of doubt about the viability of the project.

The main lobby is that of the domestic Renewable Energy Sources (RES) producers, who currently sell the kilowatt hour at a higher price than the European Union average, and about three times the price compared to Greece, taking advantage of the island’s energy isolation. The interconnection with Greece is expected to drastically reduce the price of energy, which will hurt their revenues.

At the same time, there is the domestic conventional power generation lobby, which also opposes the project, as it will reduce its revenues.

A third lobby seems to be worried about the geopolitical dimension of the interconnection, arguing that the energy support of Cyprus can remove the chances of solving the Cyprus issue or prevent cooperation with Turkey. This lobby promotes the view that all efforts to upgrade energy and adopt the European energy policy should be abandoned until a solution to the Cyprus issue is found.

Also, the attitude of the involved bodies from Greece on the issue has not helped to strengthen the confidence of the Cypriot society. The pressure from the Greek side, through anonymous entries in the press and other media, created suspicions of possible corruption in the project, giving food for scenarios of involvement which are circulated within Cypriot public opinion.

Nevertheless, despite strong opposition from various lobbies, the Cypriot government and the country’s major political parties continue to support the project.

A Cyprus Mail op-ed notes that the Government needs to be fully informed before taking GSI decision.

The project for importing LNG to Cyprus must be completed as soon as possible, as every delay costs the Cypriot economy and the consumer huge sums of money, President of the House energy committee, Kyriakos Hadjiyiannis said.

“There is a huge need for parliament to take a very critical look at this project in a way that we can help, contribute and even strengthen the very issue of transparency to the extent that we can serve it, in view of the arbitration or even the court proceedings that are going on”.

Philenews reported that French TotalEnergies, which operates jointly with the Italian ENI in seven blocks in the Cypriot EEZ, is expanding its activities in Cyprus, in the field of renewable energy sources. In joint venture with Universal Life insurance, TotalEnergies aims to implement a 100 MWsolar park.

The trial of Israeli property developer Simon Mistriel Aykut, who is accused of having developed and sold €43 million worth of property on Greek Cypriot land in the occupied north, will begin on September 27.

Aykut appeared in front of the Nicosia criminal court on Monday, where he faces a total of 124 charges. He is being represented by two Greek Cypriot lawyers and one Turkish Cypriot lawyer, while an Israeli lawyer is also observing the proceedings.

The defence is expected to object to Aykut’s continued detention.

Aykut was arrested in June while attempting to cross from the north to the Republic.

He is the founder of the Afik Group, which has carried out various construction projects in Trikomo, many of which are believed to be on Greek Cypriot land.

The Afik Group made headlines a year ago when Politis newspaper reported that a law firm co-founded by then Cyprus Bar Association chairman Christos Clerides was representing Afik Group chief executive officer Afik Yaacov.

Yaacov had reportedly registered a company named Danilen Ltd in Nicosia at the same address as Clerides’ law firm, with Politis saying the alleged link between the law firm and Yaacov emerged as part of the bar association’s obligation to oversee all lawyers and their compliance with anti-money laundering regulations. The law firm said at the time that reports of assisting people and facilitating where it comes to matters related to the north, or any connection of the firm with illegal activities “are false and a result of sinister and ulterior motives”.

The cattle breeders’ coordinating committee expressed fury over the European Commission’s decision to provide €39.5 million in aid for the Turkish Cypriot community as part of its latest annual action programme.

They said the funds, which the commission said aimed at facilitating Cyprus’ reunification and supporting the socio-economic development of the community, are “affecting the economy” of the Republic.

A report on actions taken by the Deputy Ministry of Research, Innovation and Digital Policy in relation to the creation of the “National Wallet of Cyprus” (eWallet) was published by the Audit Service.

The report identifies, among other things, serious irregularities and violations of regulations, conflict of interest, non-transparent procedures and arbitrary decisions which, as it states, “leave the Deputy Ministry and the State exposed”.

It was decided to investigate the issue following statements by the former Deputy Minister of Research, Innovation and Digital Policy,Filippos Chatzizacharias, to the media on 7/6/2023, where he complained that the Deputy Ministry, in 2022, had verbally assigned to a consortium, which consisted of the University of Cyprus and two Cypriot private companies the national digital wallet (eWallet) project. An officer of the Ministry involved in the project seems to be related to one of the companies. seems to have had close relationship with one of the companies. The companies who undertook the project by direct assignment, demand the total amount of €1,373,544 plus VAT for the works carried out.

Boat owners in Larnaca have threatened to escalate protests over mooring fees at the city’s marina, following a demonstration on Saturday . The Moored Boats Owners Association has given the Ministry of Transport, which took over marina management on May 27, until the end of the month to address their demands. They are calling for fees to be reduced to levels predating the management of Kition Ocean Marina.

Influencers in Cyprus face increased scrutiny as authorities step up checks on tax compliance and transparency in advertising.

This move, aimed at protecting consumers, follows new EU regulations requiring influencers to disclose commercial interests in their posts.

Michael McBride, Managing Partner at Chrysses Demetriades & Co. Law firm said that recent geopolitical events and subsequent sanctions have hit many economies in the EU, including Cyprus, hard. In the case of Cyprus, what had been built over the last 30 years or so with the Russian market vanished in less than one year. However, as with any crisis, there are new opportunities and it is down to the expertise of each provider to exploit them.

Director General of the Research and Innovation Foundation (RIF) Theodoros Loukaidis recently met with Henrietta Egerth, who leads Austria’s national R&D funding agency, FFG.

The meeting took place in Vienna, and sought to deepen the ties between the two agencies, while exploring future avenues of collaboration.

A cross-border tax evasion and money laundering scheme involving Greece, Cyprus and Slovakia has led to the arrest of 21 people, Greek police said.

Greece’s police said the case amounts to a €26 million tax fraud, in which at least 430 front companies were set up across all three countries.  

Unemployed and dependent persons were listed as administrators so as to conceal the identity of the real ‘masterminds’ behind the case. Fake transactions amounting to €150 million had been declared.

09/09/24

A broad meeting has been convened at the Presidential Palace this morning, in the presence of the Attorney General, the competent ministers, the deputy minister under the President and others to discuss the Interconnector. This in light of the meeting tomorrow with the participation of the Ministers of Energy and Finance, the Deputy Minister to the President on behalf of the Republic of Cyprus, the Minister of Energy on behalf of the Greek Government, a representative of the European Commission, representatives of ADMIE, NEXANS and the Legal Service of the Republic of Cyprus. The President wishes that all aspects of the project for which he and the involved ministries have reservations and concerns be discussed in an attempt for the final positions of the Cypriot side to take shape.

The President stated last Friday that he’s following with great interest the intense positions of some media and some politicians, either for or against the Interconnector. “They seem to forget what they said in the past. The government will take a decision that serves the interests of the Cypriot people and not burden them financially. We have seen in the history of this Republic what happened to big projects, with projects of great strategic importance and where they ended up”.

In response to a  remark that there are different positions within the Government, the President said “there is no different position. The job of one Ministry is to put the economic data, the job of the other Ministry is to put the energy data and as a whole we decide.”

Asked to comment on the ongoing investigations of three former Ministers in relation to contracts signed for the electrical interconnection project, the Govt. Spokesperson said that as far as he knows from media reports, “it is a letter from a member of the House of Representatives. If there are any suspicions, any shadows, everything should be investigated, everything should be brought to light. For us, what interests us is to ensure the benefit of the Cypriot consumer, and with this in mind we will continue to make decisions on the basis of real data, without any shadows”.

The Great Sea Interconnector project will go ahead “if its financial viability is ensured”, Greek Prime Minister Kyriakos Mitsotakis said.

“I consider it to be a very important project, and much more important for Cyprus because it essentially breaks the country’s energy isolation. I can assure you that if the financial viability of the project is ensured, the project will be done and any geopolitical risks will be overcome,”.

The Minister of Energy & Environment of Greece, who will participate in the meeting on Tuesday for the Interconnector, said that “the things we had expected have not been done  neither in general, nor in particular.” According to Philenews information, the statement is not irrelevant to the Greek government’s strong discomfort by President Christodoulides’ personal decision not to ratify, at the recent Council of Ministers meeting, the additional terms requested by the project implementor to be included in the regulatory framework.

The president of DISY party Annita Demetriou was asked to comment on the statements of former president of DISY, MP Averof Neophytou, who expressed the opinion that with the Cyprus issue unresolved, no energy project is going to be completed.

She disagreed with his statements stating that the interconnection project, as a project of geostrategic importance that removes the energy isolation of Cyprus, should be approached positively.

It is the responsibility of the govt. to answer questions being raised and to put in place the safeguards needed for the successful completion of the project. She wondered whether, due to the Turkish occupation, far-reaching plans should not be made.

“Everyone has the right to express their opinions, but DISY’s position is positive towards the project.”

In relation to the geostrategic risk and Greece’s position, she noted that Greece is Cyprus’ strongest ally and that the various questions must be included in the discussion of the negotiating framework. “Everyone must take on his role and it is important that we don’t come out in retrospect and say what we believe”.

Cyprus is in a vulnerable position and stands alone in the issue of electrical connectivity, said the American Ambassador to Cyprus Julie Davis Fisher on the sidelines of the 4th Metropolitan Economist Summit in Thessaloniki last Friday.

Essentially referring to the issue of the electrical interconnection, she said: “Now is the time to stop thinking only about money and the involvement of the EU regarding the Great Sea Interconnector. It is time to think about the geopolitics around such a project and recognize how important it is to see Cyprus connected to Europe through this opportunity. Cyprus fought for major energy projects and we saw a series of Presidents trying to implement them. Now is the time to do it right because these opportunities will pass and Cyprus will be left behind. For the US what matters is stability and security in a region that is lacking it. Cyprus is very important for us in the Eastern Mediterranean region and ensuring the energy supply is important for Cyprus “.

Under Secretary of State for Energy Resources of the US Department of State’s Office of Energy Resources, Jeffrey Pyatt also made statements during the conference about the usefulness of diversification of energy sources, including the energy cooperation between Cyprus and Israel.

This can create greater connectivity in the Eastern Mediterranean, based on clean energy.

Philenews reported that whatever the President had planned in his mind for the meeting he called for Tuesday will have to be reconsidered after the direct and overt intervention of the USA, through its ambassador in Cyprus. The Americans are “pushing” for the implementation of the project. The State Department took a clear position in favor of Cyprus’s compliance with the planning for the promotion of electrical interconnection here and now. The US ambassador to Cyprus, although indicated that it is time to think about the issue of geopolitics around the Interconnector, did not say a word about the big geopolitical danger and Turkey, leaving to Cyprus and its President the ‘hot potato’. During her presentation she repeated the word ‘now’ many times, meaning immediately. Dialogos referred to a blatant intervention by the Americans calling on Cyprus to accept the plan for the promotion of electrical interconnection, here and now.

Philenews reported that the cost of the geopolitical risk and the possible obstruction of the electricity interconnection by Turkey is the most important issue to be discussed at the meeting on Tuesday for the Interconnector. But non-completion of the project can theoretically be caused by other factors, which fall under the definition of “force majeure”. According to info., the invitation of Nexans to the meeting is linked to the need to discuss ways to substantially reduce the burden on the consumers of Cyprus and Greece if the project is interrupted. Unconfirmed information states that ADMIE has informed that the cost of a reversal of the plans due to Turkish intervention will be at least 500 million euros. But the Cypriot Government is concerned that it may be much higher. During the meeting, many parameters of this aspect will be discussed, both with Nexans and the European Commission, so that any compensation is as little as possible for consumers and the EU can contribute (through the sponsorship of 657 million and not only).

Turkey’s Vice President Cevdet Yilmaz promised to “ensure the sustainability of the energy supply” in the occupied north. He said Turkey plans to build a “sustainable energy infrastructure” while the occupied north’s ‘prime minister’ Unal Ustel reiterated, during Yilmaz’s visit, that plans are afoot to lay an undersea cable which would connect the north to Turkey’s electricity grid.

This, he said, will “solve the energy problem completely”.

Following these statements, a meeting on the matter of “energy security and supply” was held in the presence of Turkish Cypriot leader Ersin Tatar who said the cable will “mark a new era”, while Ustel described it as the “project of the century”.

The cable was due to be completed in 2028, though this timeline was based on the planning phase having finished and construction having begun in 2024.

“President” Ersin Tatar said the  Immovable Property Commission (IPC) has concluded and closed 1,840 cases to date. Stressing that the IPC is an internationally recognized domestic remedy for property disputes, Tatar said the “government” with support from Turkey will continue to do everything possible to ensure it works effectively. There have been reports in the Turkish Cypriot media recently of efforts by the Cypriot Republic to negatively affect the Turkish Cypriot economy via the property issue.

Cypriot media have been reporting that the Republic is targeting usurpers of Greek Cypriot properties, triggering a domino effect across the economic and political landscape of the occupied territories.

They also report that it has led to a significant exodus of foreign investors from the area. 

The government has said Turkey is using the Immovable Property Commission (IPC) to avoid its obligations to claimants who were displaced in 1974 and won cases in international courts.

Politis reported that in addition to the legal measures, there are also important technological weapons that can be used immediately and effectively.

Internet posts related to the promotion of property sales in the occupied areas that were illegally erected on lands belonging to Greek Cypriots can be removed or even disappear.

In a written statement, regarding allegations of the existence of a “black hole” at the entry points of the Republic from where “black money” is trafficked, the Minister of Finance  assures that “the Ministry of Finance, taking it very seriously and in its effort to continuously improve the procedures and systems for controlling liquid assets at the entry and exit points of the Republic, has taken all actions to investigate the matter and find ways to strengthen and improve the work of the Customs Department in order to more effectively carry out its work” .

Cyprus achieved the third-highest annual growth rate in the European Union and the second-highest in the eurozone for the second quarter of 2024, according to Eurostat.

Secret investment funds registered in Cyprus were used to hide luxury yachts and real estate linked to a sanctioned Russian banker, the Cyprus Investigative Reporting Network has revealed.

Cyprus Business News reported that some 1,900 Cypriot companies may be subject to the upcoming higher corporate tax rate as Cyprus brings its legislation in line with European and global practices, George Panteli, the Permanent Secretary of the Ministry of Finance said.

He also noted that the global nature of the new rate also meant the Ministry did not foresee companies relocating from the island.

Two well-known economists (Andreas Charalambous and Omiros Pissarides) in an article in the Cyprus Mail note that serious delays in projects of strategic significance for the country, such as the import of natural gas, the port of Larnaca and the Paphos-Polis highway, have led to an intensification of discussions, domestically. The evaluation of public investments should be assigned to a specialised government department and a standardised, merit-based and transparent evaluation process should be established. For key strategic and/or complex projects, it is important to seek the involvement of experts.

Owners of pleasure boats staged a protest at Larnaca Marina, demanding that the state reduce mooring fees since it took over the marina’s management on May 27. They expressed their dissatisfaction with the increased charges and mooring fees that had been imposed by Kition Ocean Holdings.

The Nicosia Municipality announced the launch of a new two-month business accelerator programme.

This initiative is specifically aimed at individuals, teams, and existing businesses in the creative and cultural sectors who are looking to develop their ideas.

04/09/24

The government on Tuesday was forced to deny media reports it has taken any final decisions hidden from the public eye regarding funding for the controversial electricity interconnector project.

“No definitive agreement has taken place in relation to the final content of the regulatory framework governing the Cyprus-Crete electricity connection,” director of the president’s press office Viktoras Papadopoulos said.

Talks between the stakeholders are ongoing, he added, advising “patience”

Philenews reported that the that the matter would be closed today at the Ministerial level, information indicates that perhaps the decision will be postponed until tomorrow or Friday, as it is quite possible that not all the documents will be available for the members of the Government in time today . There are also reservations or objections that may be expressed by some ministers, specifically the finance minister, who has expressed concern. These are more connected to the state participation in the project rather than the final content of the regulatory framework.

Based on the law, any expenditure regarding the fund of emissions (225 million euros to be paid to the implementor)  must be included in the budget and approved by Parliament. However, it is not certain whether a budget will need to be submitted for the 2025 tranche now or in the next period.

MPs expressed strong doubts over the state’s decision to utilise the country’s emissions penalty fund to finance the Great Sea Interconnector and have sent a letter to the President to convey their concerns over the mode of financing for the interconnector project, and seek clarity from the president as to the government’s intentions.

Speaking to Cyprus Mail, Greens MP Charalambos Theopemptou said the move had been met with furious opposition from electricity authority (EAC) experts who have long held that investing in the island’s own infrastructures was the only sane priority.

This would entail fixing the massively polluting Dhekelia power station, building-up energy storage, and unpegging the price of renewable energy (RES) from conventional fuel production. Also, convincing the EU to use finds from the Emissions Trading System fund

will not be easy, he added.

The reported agreement has been portrayed as a means to avoid passing on the GSI funding gap of €125 million onto consumers.

MP and House energy committee chair Kyriakos Hadjiyiannis was also critical stating that instead of the cost being paid through a monthly fee it will be paid by the central state. It also leaves the state open to ongoing cost hikes, with the consumer ultimately paying the bill sometime in the future. Cyprus would also be supplied from the fourth most expensive energy producer in Europe and Cyprus did not need Greece’s RES energy.

A European Union directive by which a set percentage of energy used by member state residents must be derived from an interconnected source, means Cyprus must press ahead with the Great Sea Interconnection, Cyprus Chamber of Commerce and Industry (Keve) general secretary Marios Tsakkis said. The ultimate linking up of the Greece-Cyprus electric systems to Israel is also an imperative for the enterprise to make sense Tsakkis said.

Asked about the final leg of the GSI with Israel, Tsakkis said the cost for this would certainly be borne by the Israeli state, however, he could not detail how this would affect the 67/33 per cent cost sharing already determined for Cypriot and Greek consumers by the project implementor.

The geopolitical significance of the project particularly in regards to its linking up Europe with Israel, was underscored by the energy minister during a meeting with the Chamber.

Chevron, in an announcement, stated that the amended plan submitted for Aphrodite includes improvements to the approved 2019 plan, which will be beneficial to both Chevron and the Republic of Cyprus.

The new plan is similar to the 2019 Development and Production Plan, but at the same time, it recognizes the decline in available natural gas resources and has therefore been further optimized for the benefit of the Republic of Cyprus and partners in Aphrodite.

According to Chevron, the plan includes a Floating Production Unit (FPU) (also known as a Gas Processing Unit) in the Exclusive Economic Zone (EEZ) of Cyprus and a pipeline to export gas.

It asks for continuous support from the Republic.

Today a new hearing is scheduled at the London arbitration court regarding the liquidation of the guarantees of CMC for the Vasiliko project, amounting to 70 million euros.

After the termination of the contract, CMC appealed to the arbitration court to freeze and suspend the process of liquidation of the guarantees

The Chinese consortium also claims additional compensations due to delays that occurred during the construction of the project.

A meeting of the Minister of Transport, Communications and Works with the Mayor of Larnaca has been scheduled for September 27, during which the developments surrounding the city’s port-marina project will be discussed.

Politis reported that with financial support of the so-called ‘reparations committee’, Turkey seeks to limit the effects caused by the arrests for the illegal exploitation of Greek Cypriot properties in the occupied north. Tens of millions of euros were granted in order to start an effort to buy land belonging to Greek Cypriots (provided the legal owners themselves agree) in order to appease the reactions of investors.

The European Court of Auditors  raised concerns about the slow absorption of the Recovery and Resilience Facility (RRF) funds across the European Union.

According to the ECA’s latest report, the funds are entering the real economy at a slower pace than anticipated.

As of the end of 2023, Cyprus had only submitted 40 per cent of the payment requests outlined in the indicative schedules of its operational arrangements, compared to the EU average of 70 per cent.

Additionally, only 8 per cent of the allocated funds for Cyprus had been disbursed, with just 5 per cent of the milestones achieved. This corresponds to 14 out of a total of 271 milestones.

Globe Invest Limited, the family / investment office of Teddy Sagi, announced that its subsidiary company, Whitestreet Investments, has signed agreement with Trastor for the sale of Excelsior Hotel Enterprises, owner and manager of the Labs Tower in Nicosia.

Trastor is one of the leading investment groups in Greek real estate. Globe Invest will continue to manage Labs Tower.

03/09/24

Partners in the Aphrodite natural gas field submitted a new development plan for the field to the government. In an announcement, the partners (NewMed Energy, Chevron and Shell) said the estimated cost of the updated development and production plan will be approximately $4 billion. The partners also said that they would be building an independent floating production facility, which will have a maximum production capacity of around 800 MMCF per day through four production wells.

The natural gas will be exported via a pipeline to the Egyptian transmission system.

Yossi Abu, CEO of NewMed Energy stated: “We updated the development plan according to the instructions of the Cypriot Minister of Energy, and look forward to the plan’s approval to allow swift progress in the development of the reservoir. The reservoir’s development is another step in the regional collaborations that are evolving around natural gas in the Mediterranean Basin”.

Philenews reported that the proposal indicates that the consortium is going back to the provisions of the 2019 agreement, conceding the use of a FPSO over the field, as well as operating four production wells. Energy experts in Cyprus and Greece have described the estimated cost excessive and even unrealistic, indicating that it will ultimately deter the investment itself and hinder profitability for both parties.

The Cypriot government’s ‘notice of breach’ letter sent recently relates to one of the milestones in the contract, namely the performance (by the consortium) of the Front-End Engineering Design, or Feed.

The updated development plan for the Aphrodite gas field is moving “in the right direction and close to the positions of the Republic of Cyprus” President Nikos Christodoulides said, noting he has already arranged meetings with Chevron in his upcoming New York visit for the UN General Assembly. CNA sources suggested the government would be issuing its response in two weeks. According to the sources, the plan includes amendments to the updated plan submitted in the summer of 2023 and is moving towards the agreed original development plan submitted by Noble Energy, the previous operator of the gas field, in 2019.

An agreement was reached over the funding gap for the Great Sea Interconnector, according to media.

The governments of Cyprus and Greece, the EU directorate-general for Energy, the regulatory authorities of the two countries, and Greece’s independent power transmission operator, Admie, were reported to have agreed on the final content of the regulatory framework.

The agreement was concluded, reportedly, after the initiative of the President of the Republic, who had direct talks on the matter with the Greek Prime Minister Kyriakos Mitsotakis and the European Commission.

The accepted solution involves tapping into the state’s energy penalty fund for emissions, state broadcaster CyBC reported.

The fund will be used to pay out €25 million per year, from 2025 to 2030, to cover the cost of the project.

The move is presented as an avoidance of foisting the project’s cost directly onto individual consumers, a proposed measure which had been blocked by Cyprus’ energy regulator (CERA).

Official statements are expected on Wednesday. Philenews reported that the regulatory framework approved by CERA since 2023 will not change, at least in this phase, as far as geopolitical risk is concerned. The reference will remain that in the event of an external risk that will interrupt or prevent the completion of the project, without the direct responsibility of the implementor, CERA may approve the recovery of the costs that the implementing body will have incurred until then from the consumers. The implementing body wanted to remove the word “may” reservation, after the clear position of the Cypriot Government that the geopolitical risk will be borne by the investor and not the consumers.

The preferential rate of capital return of 8.3% is expected to be granted to the implementing body for 17 years. instead of 12. This will secure revenues of some millions to the implementing body, so that the project is considered sustainable (profitable for investors) in all its phases.

According to Greek media there is intense concern among the Greek authorities, as regards the issue raised by ADMIE for the geopolitical risk, which gives Turkey ‘’a foothold’’. The pressure on Cyprus to resolve the disputes, as well as reported threats towards CERA, are also a concern.

The Cyprus News Agency reported that according to its info., the project seems to be slightly sustainable during its construction but according to international investment practice, in such cases it does not attract investors.

Philenews (political editor Costas Venizelos) reported that the occupation regime in the north has resorted to new scare tactics as it attempts to force the Cyprus government into abandoning the intensive campaign of cracking down on European or third country nationals illegally purchasing or selling Greek-Cypriot properties in the north. The threat is the settlement of the fenced off city of Famagusta, in blatant violation of Security Council resolutions.

According to the editor’s sources, this is because the latest arrests of property usurpers had a subsequent major financial impact.

According to reports, the Afik Group, owned by Simon Aykout, currently in custody, was forced to lay off 700 employees following the latest developments, which have scared off many foreign potential buyers, while many illegal owners are now selling out and leaving the occupied territories.

Following a report in Dialogos that a provision for a ceiling on trade in the port of Larnaca exists, Philenews also reported that DP WORLD, which manages the port of Limassol, received 3.3 million euros in compensation just for 2023.

The company claimed this amount after a dispute with the Ministry of Transport and received it after winning an arbitration.

This provision was in the privatization agreement of the port of Limassol by the previous government and stipulates that if the port of Larnaca exceeds a certain ceiling of activity, compensation must be paid to the contractor company of the port of Limassol.

According to Dialogos, the state has already paid compensation of 9 million euros to the port of Limassol for exceeding the upper limit of commercial activity in the port of Larnaca for the period 2017-2021. Philenews reported that supposedly, the compensation that the government was going to pay would be very low but in reality, many millions have already been paid. The Legal Service had expressed disagreement with some provisions of the proposed agreement, but the ministry of transport ignored it. The provisions, instead of favoring the state, favored the companies.

The number of people crossing from the Republic to the occupied north via crossing points has decreased by 4% in the first seven months of 2024 compared to the same period last year. Excluding Turkish Cypriots, just over 2.81 million crossings were made to north via Cyprus’ nine crossing points between January and July this year. Crossings by Greek Cypriots also saw a slight decline while some nationalities saw dramatic falls in the total number of crossings-Russian citizens falling by 21 per cent and crossings by Israeli citizens dropping by 31 per cent. Some nationalities experienced an increase. Earlier in the summer, former Cyprus Turkish tourism and travel agencies’ union (Kitsab) director Mustafa Soforoglu had raised the alarm, saying the north is “suffering major losses” in its tourism sector and facing a serious decline in the number of foreign tourists. The reasons are the increased costs of flights accommodation while there is inadequate promotion in the international arena.

Dismissing 15 employees from Kition Ocean Holdings was necessary, Transport Minister Alexis Vafeades said, adding that efforts were made to find suitable positions for these individuals at the newly established Larnaca-Famagusta District Development Company.

The employees had been promised similar jobs after the collapse of the Larnaca Marina project. However, for 15 out of the 87 employees, the transport ministry was unable to find roles within Anetel. In a joint statement issued last week, the former employees expressed their dismay at the situation

The price of package holidays in Cyprus as well as in the EU continued increasing in 2024, with Cyprus recording the third highest increase among member states in July, according to data released by Eurostat.

In July 2024, the consumer price of package holidays in the EU was 6.6 per cent higher than in July 2023. The price of domestic holiday packages was up 11.1 per cent, while international holiday packages saw a 5.7 per cent increase.

In Cyprus, the consumer price of package holidays in July 2024 was 16.7 per cent higher than July 2023. The price of domestic holiday packages had increased by 11.8 per cent while international holiday packages saw a 17.2 per cent increase.

The occupied north’s ‘tourism minister’ Fikri Ataoglu implored Turkish holidaymakers to choose to travel to the north instead of to the Greek islands for their holidays.

This trend of Turkish citizens choosing to holiday in Greece comes with the north’s tourism sector enduring a difficult year, suffering major losses in its tourism sector.

The Cyprus general government recorded a surplus of €702.50 million, equivalent to 2.2 per cent of GDP, during the first seven months of 2024.

This marks a significant improvement from the €345.90 million surplus (1.2 per cent of GDP) reported during the same period in 2023

The growth was driven by increases across several revenue streams such as taxes on production and imports, revenue from taxes on income and wealth, social contributions and property income.

The economic growth rate for the second quarter of 2024 in Cyprus is positive, estimated at 3.6% compared to the same quarter in 2023. The positive growth rate is mainly attributed to the sectors of “Hotels and Restaurants,” “Construction,” “Information and Communications,” and “Wholesale and Retail Trade, Repair of Motor Vehicles.”

The European Union’s ‘Med9’ states’ agriculture ministers on Monday called for a “holistic approach” to water, which will ensure that the region’s inhabitants can live sustainably in the future and be insulated against water scarcity, Cyprus’ Agriculture Minister Maria Panayiotou said.

She said the ministers’ aim was to issue a joint communique on the matter of water scarcity.

Former transport minister in the Anastasiades government, Marios Demetriades, has been charged in the golden passports scandal, for offences related to corruption, bribery and money laundering. The indictment comprises over 50 charges against eight individuals and two legal entities.

These include Demetriades’ father and two siblings.

Philenews reported that according to Danos Property Consultants and Valuers, despite significant annual increases in property prices and rents across Cyprus, recent quarterly data indicates that the housing market is showing signs of slowing price growth for the first time since 2020. This slowdown is evident in the stabilization and, in some cases, slight decline in house and apartment prices across the island.

Peace in the hotel sector has been put on hold as trade unions dismissed an intermediary proposal put forward by the labour ministry for the renewal of the industry’s collective agreement.

Ayia Napa and Protaras have joined forces to boost their tourism product.

A joint promotional campaign, “Live Unforgettable Moments,” launched in August, seeks to attract visitors from key markets such as the United Kingdom, Scandinavian countries, Germany, Switzerland, Austria, Poland, and France.

Hellenic Bank posted a profit after tax of €189 million for the first half of 2024, marking an 18 per cent increase compared to the same period during the previous year.