Cyprus: Troika asked to postpone electricity market reform

4 November 2015
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Opening Cyprus’ electricity market to private players should be postponed, electricity technocrats told a delegation of Cyprus’ lenders visiting the island for the eighth programme review.

The issue of opening the market was discussed during a meeting between Troika (EC, ECB and IMF) technocrats in the Ministry of Finance. Sources told CNA that stakeholders, including the Cyprus Transmission System Operator of Electrical Energy, requested that the opening of the market to the private sector be postponed due to practical reasons such as the staffing and training of the DSM, as well as the introduction of new software for the project.

Cyprus Regulating Authority (CERA) issued last May a regulatory decision to facilitate the introduction of competition in the electricity market. The decision was to be implemented by mid-2016.

Troika technocrats also discussed the issue of the unbundling the Electricity Authority of Cyprus (EAC), ahead its privatisation scheduled for mid-2018. The discussions focused on the study carried out by a consortium Exergia and MRC for EAC’s legal unbundling. On the basis of the study, the Council of Ministers should decide by December 2015 on the form of an efficient and effective legal unbundling of EAC that would take effect by the March 2016.

The discussions also covered the state of play with regard to the consultations for the competition for the supply of natural gas to the Cyprus Natural Gas Company for power generation. DEFA is in consultations with Vitol while the competition is expected to conclude before the end of the year.

In separate meetings in the General Directorate for European Programmes, Troika technocrats discussed with the Department of Land Surveys officials the issue of the backlog in the issuance of immovable property title deeds. Under the programme, Cyprus should reduce the title deed issuance backlog of immovable property units from development projects pending for more than six months to less than 3,500 units by the end of the year.

Meanwhile the high stock of non-performing loans, currently at 48% of the sector`s total loan portfolio was in the epicenter of contacts in the Central Bank.

Troika technocrats discussed with a delegation of the Hellenic Bank on the progress of loan restructuring following the implementation of the insolvency framework and the new law on foreclosures. In the afternoon Troika technocrats will be meeting the bank’s centralised arrears management units.

Cyprus is close to completing its €10 billion bailout signed with the EU and IMF in April 2013. So far the government received assistance amounting to €7.1 billion while Finance Ministry officials say that one disbursement remains until the programme’s completion in March 2016.

Source: CNA

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