Investors warn of government, union collusion to ditch power market liberalisation

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By Stelios Orphanides

A business group representing investors in power generation and supply warned the government not to give in to union demands to ditch plans for the liberalisation of the energy market by mid-2019.

The Cyprus Free and Competitive Energy Market Business Association (CFCEMBA) said the outcome of behind the scenes talks between the government and the unions at the state-owned Electricity Authority of Cyprus (EAC) is threatening private investment in the energy market.

The warning came as the government tries to avert labour action announced by workers at the power producer which has a de facto monopoly. Four unions at EAC – Epopai, Sidikek-Peo, Sepaik and Syvaik – plan a two-hour work stoppage on Thursday, November 9, and a 24-hour strike on November 16.

According to a report in Politis, the unions demand that instead of the operation of an independent Transmission System Operator (TSO), the bureau of an independent Market Officer is established which will allow the TSO to operate as part of EAC. EAC chairman Andreas Marangos, a government-appointee, proposed to the unions to delay independent operation of the TSO for a two-year period, delaying the liberalisation of the energy market for a further two years.

“The political leadership is trying to square the circle in an attempt to hush the unions with their unreasonable demands,” the business group said in an emailed statement adding that it has not been asked to participate in the negotations that affect its members. “As always, stakeholders are never invited”.

“The TSO is the par excellence technical body of the state which ensures the smooth operation of the power grid,” the CFCEMBA said.

Giving in to the unions’ demands would be like giving a private bank full ownership over the Central Bank of Cyprus, which supervises lenders which contradicts “all reason and corporate governance” rules.

“If the state wants to see the new competitive power market become reality and operate smoothly, it will have to offer confidence and a stable environment to all market participants,” the group said. “Which self-respecting entrepreneur would invest in a market whose supreme regulator is in the hands of his competitor’s unions?”

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  • Bob Ellis

    Three words – Unions, Elections, Cyprus. Sadly, like most previous elections (apart from 2013 where AKEL could not be reelected due to their 4 years of pillaging and wrecking the economy far more than any of their predecessors) the election next year will be the party that promises the easiest money for the least work who will win. As usual the people will vote for short term unsustainable populism funded by the meager coffers and momenetary blip in selling passports and tourism. After all, the village idiot had a €2,500,000,000 hole in his budget that all could see from his ‘manifesto’ and surprise, suprise 4 years later we collapsed with debts of €10,000,000,000. This budget pandered to unions, civil servants, unemployed, farmers and anyone else who whould sell out Cyprus for personal gain. These very same voters will forget about the lead up to the crisis, with most thinking that is ancient history, believing we can return to our old broken ways. Most believe they will be on the lifeboat watching the ship sink although those seats are already booked. Cyprus undertook the privatisation of electricity in Cyprus as a promise (amongst many others) in order to be bailed out from a situation of our own making, how will anyone trust us when we get the begging bowl out again in a couple of year ? as this news is obviously a omen of the ridiculous farce that is to come in the lead up to one of the biggest decisions in the history of Cyprus.

  • Costas Apacket

    It’s taken the crooked usual suspects 10 years to implement the EU ruling about levying Vat on commercial land sales, which is a far less critical decision than this.

    Yet another example that Cypriots are not fit to run this island.

    Rape, pillage and steal all you can from the golden goose whilst you still can because the time of reckoning is nigh.

  • SuzieQ

    I think the last sentence says it all–it’s a stark warning which will, in all probability, be totally ignored.

  • CyprusOilMan

    I had a chance discussion with a PR representative of Tesla (Cars) in the UK recently. They are actively scouring Europe for new markets, but when I mentioned Cyprus, he replied that their business model doesn’t fit Cyprus, because it requires an open and competitive energy market. So, no Tesla cars for Cyprus then !!! I wonder how many other industries rule out Cyprus because of EAC’s power monopoly?

    • Didier Ouzaid

      In my opinion there are a bunch of other (and possibly more important) reasons Tesla aint here. Look around, despite what the law says France still has a de facto monopoly on electricity (EDF – roughly 80% market share on corporate accounts and 91% on household accounts), the competitors share the crumbs. Do you really see Tesla not being there?

      Market size, infrastructure deployment, spending power, user adoption when it comes to technology, etc.

      • CyprusOilMan

        You are probably right : I am sure there are lots of reasons. But they are keen to invest in markets that are receptive to their “PowerWall” and “SolarRoof” concepts, ie: domestic sources of renewable energy. With year-round sunshine, Cyprus ticks all the right boxes …. so why doesn’t Cyprus embrace such free-market liberalisation? Ah, EAC, enough said.

  • Didier Ouzaid

    “If the state wants to see the new competitive power market become reality and operate smoothly”

    Well, it doesnt. Who said it did? That signature on the bailout memorandum? please…

    “Which self-respecting entrepreneur would invest in a market whose
    supreme regulator is in the hands of his competitor’s unions?”

    Well, some of you apparently did. Mistake?

  • Cydee

    Be careful what you wish for. The uk energy market, rather than being competitive, has become a cartel of private enterprise; there is nothing to choose between them. So we might as well have stayed with national energy; at least the profits would go into the national coffers.