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).