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%.