Financial Issues Continue to Stall the GreeceโCyprusโIsrael Energy Link
More than a year after the intended production order, the Great Sea Interconnectorโa critical project designed to link the electricity grids of Greece, Cyprus, and Israelโremains stalled due to unresolved financial arrangements and deposit guarantees. These persistent issues cast doubt over the projectโs long-term viability and its ability to proceed as scheduled.
According to a report by Vima, a Greek newspaper, complications began in mid-2023 when the original developer, EuroAsia Interconnector, requested an increase in financing to โฌ1.9 billion from Greek and Cypriot regulators following significant cost overruns. Although a much-delayed contract with French cable manufacturer Nexans was finally signed for the CreteโCyprus segment, EuroAsia failed to make the necessary advance payment, threatening to derail the agreement.
Governments Step In to Rescue the Great Sea Interconnector
To prevent the project from collapsing, both the Greek and Cypriot governments intervened. They directed Greeceโs Independent Power Transmission Operator (IPTO)โa state-owned utility and member of the European Network of Transmission System Operatorsโto take over project responsibility.
The European Commission backed this decision, expressing confidence in IPTOโs ability to deliver the project. In October 2023, IPTO officially assumed management, and the initiative was renamed the Great Sea Interconnector. After thirteen years of planning, the project formally entered its implementation stage, marking a turning point in its history.
Regulatory and Financial Setbacks Threaten Progress
Despite this renewed momentum, challenges persisted through 2024. Although the first construction phase began in December 2023, setbacks quickly followed. IPTO instructed Nexans to reserve production slots and begin cable fabrication, but in July 2024, the Cyprus Energy Regulatory Authority (CERA) issued a ruling that disrupted the projectโs financial structure.
CERA declined to recognize a reasonable return, revenue, or cost recovery during the construction periodโan unprecedented move that undermined the projectโs financial viability. This decision put both investors and contractors in difficult positions, forcing further negotiations.
Bilateral Agreement Offers a Path Forward
In addition, the Cypriot government failed to meet its earlier commitment to acquire a stake in the project, despite promises to finalize a decision by January 2024. The resulting uncertainty delayed funding plans and extended the projectโs risk exposure.
However, progress resumed in September 2024, when Greece and Cyprus signed a bilateral agreement to accelerate the Great Sea Interconnector. This accord reversed the earlier regulatory decisions, restored economic feasibility, and laid a more sustainable foundation for the projectโs implementation moving forward.
