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%.