Nexans announces intention to suspend works for Great Sea Interconnector

Nexans, the company that is setting up the cable for the electrical interconnection between Cyprus and Greece has informed its employer, Greece's Independent Power Transmission Operator (IPTO), of its intention to suspend the works for the Great Sea Interconnector (GSI) on 2 September. Subsequently, IPTO sent a letter to the Cypriot authorities expressing concern about the unresolved regulatory issues by the Cypriot side.

In the letter, obtained by Cyprus New Agency, Nexans makes reference to Clause 2.5.1 of the Novation Agreement 'which entitles Contractor to immediately suspend the works if, among others, the Full Notice to Proceed is not received by 31.08.2024'. According to the letter of notice, to date, Employer has not issued the Full Notice to Proceed.

''While we understand fully that the reason the Employer has not issued the Full Notice to Proceed, is the still pending regulatory issues from the Cypriot Regulator - despite the best efforts of the Employer, the EU, the Governments and Regulators – nevertheless the result remains the same'', the letter reads.

Nexans warns that if the Full Notice to Proceed is not issued by August 31 or if the regulatory issues are not resolved, the company will suspend all work effective September 2, 2024. The company also indicates it would seek compensation for any delays or additional costs incurred.

Nexans notes that ''any additional costs incurred due to this suspension and/or resumption, including but not limited to demobilization, remobilization and extended Project timelines, will be the sole responsibility of the Employer''.

On Wednesday, IPTO sent a letter to Cyprus' Energy Minister and Cyprus Energy Regulatory Authority, informing them about the company's intention. 

In the letter, also obtained by Cyprus New Agency, the (IPTO), expresses deep concern over the potential suspension of works by Nexans, after the regulatory framework was altered by CERA’s decision No. 215/02.07.2024, which, as he says, has rendered the project financially unviable for the implementing body and any potential investors. The operator notes the extensive efforts made in recent months to persuade Nexans not to halt their work, despite the ongoing regulatory uncertainties and the lack of completion of the necessary framework.

According to IPTO the recognition of revenue and the determination of the project's reasonable rate of return, should be based on a clear revenue methodology and reflect real economic factors, such as the cost of borrowing during the first regulatory period. Additionally, IPTO calls for a revision of the cost-sharing agreement to address a financial gap of €100 million and to mitigate geopolitical risks, similarly to how the Greek Regulatory Authority has done.

The letter was also forwarded to several high-ranking officials, including the Greek Minister of Environment and Energy, Theodoros Skylakakis, the Greek Deputy Minister of Environment and Energy, Alexandra Sdoukou, and key officials within the European Commission. These include Ditte Juul Jørgensen, Director-General for Energy of the European Commission, Catharina Sikow Magny, Director for Green Transition and Energy Systems Integration, and Dimitris Fourlaris, Vice President of Regulatory Authority for Waste, Energy and Water (RAAEY).

(Source: CNA)