EAC 2016 net profit rises to €66m as revenue drops

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By Stelios Orphanides

The Electricity Authority of Cyprus (EAC), the state-owned power producer, said that it generated a €65.8m net profit last year, 17 per cent more compared to 2015, mainly on reduced operating expenses.

The EAC saw its turnover last year drop 7.6 per cent to €580.3m compared to 2015, which an 11 per cent decrease in operating expenses to €492.2m more than offset, the company said in its 2016 annual report. Fuel cost and wages and salaries fell 15 per cent to €245.9m and 12 per cent to €78.9m. Operating profit rose 13 per cent to €83.7m.

The power company, which split its operations last year in to two divisions, one responsible for production and supply and the other for transmission and distribution, said that it generated 4,455.3m Kilowatt-hours (kWh) in 2016, 7.9 per cent more compared to 2015. It also sold its customers 4,358.5m kWh, 8 per cent more compared to 2015.

The average price per kWh sold fell last year 16 per cent to €0.11957, the EAC said. The number of customers rose 1.1 per cent to 565.600, while the number of its staff fell 0.5 per cent to 2,035.

The unbundling of the operations and accounts of EAC, which stood until 2015 on the government’s privatisation list, is one of the main challenges the company faces as the regulator is preparing the complete opening of the market to private competitors, said Andreas Marangos, the chairman of the company’s board of directors.

Marangos, a lawyer by trade, said that the elimination of the company’s reliance on mainly heavy fuel oil, and secondarily diesel, for power generation with the introduction of natural gas by 2020 is the biggest challenge for EAC.

Cyprus, which made its first gas discovery in 2011, has been unsuccessful so far in developing the Aphrodite gas field containing 4.5 trillion cubic feet (tcf) of natural gas. Efforts to introduce natural gas for power generation, even as part of an intermediary solution before production at Aphrodite begins, have also remained unsuccessful.

In the above context, Defa, the state-owned Natural Gas Public Company, “will proceed with the help of advisors it will hire with the preparation of the specifications for the long-term supply and the basic quantities of liquefied natural gas (LNG),” said Marangos according to an emailed transcript of his speech at an event in Nicosia. He added that the advisors will also be tasked with finding a strategic investor who will construct and operate the related infrastructure.

“The EAC will proceed in hiring consultants with respect to its own contribution to these procedures and is undertaking the necessary steps for the conversion of its existing generation units in using natural gas as fuel,” he said. “The cost of these projects is estimated at €100m”.

Marangos said that the company is planning to cooperate with various other bodies in installing photovoltaic plants, including with the University of Cyprus for a plant with a capacity of 10 mW, the ministries of energy and education to equip about 400 schools, and municipalities and community councils.

“The EAC plans to construct the largest photovoltaic plant in Cyprus with a capacity of 20 Mw in the area of Akrotiri in Limassol,” Marangos said. “It is a project of national dimensions and of vital importance for the transition to power generation from renewable energy sources and may cover the consumption of tens of thousands of households,” he said.

This project is expected to require up to €22m in investment.

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