The Great Sea Interconnector (GSI) has completed 60% of its marine surveys and part of its submarine cable construction, but its completion date has been pushed back from 2030 to 2031, while the final cost remains unknown.
“The €1.9 billion figure is no longer valid. The amount is an unknown quantity, but it appears it will be much higher,” Cyprus Energy Regulatory Authority (CERA) chairman Polyvios Lemonaris told the House Energy Committee on Tuesday, 20 October.
He stressed that the final cost would depend heavily on the results of the remaining marine surveys.
CERA presented financial data and an update on the project’s progress to parliament, outlining three scenarios under which the electricity interconnection between Cyprus and Crete could be terminated.
Under the scenario involving geopolitical risk, Cyprus and Greece would each bear 50% of the project promoter’s expenditure deemed reasonable.
MPs also raised questions about the project’s financial viability and safeguards against changes in ownership or control.
How much will the Great Sea Interconnector cost?
Lemonaris presented the financial figures currently available to CERA:
- The approved investment cost was €1.9 billion.
- The European Union has awarded a grant of €657 million.
- After deducting the EU grant, Greece’s 37% share of the remaining investment amounts to approximately €440 million, while Cyprus’s 63% share is approximately €749 million.
- Operating costs are shared equally between Cyprus and Greece.
- Annual operating costs during construction are estimated at approximately €2 million.
- Once operational, annual operating costs are expected to reach €15.5 million.
- For the first regulatory period, covering 2024–2025, regulators provisionally approved capital expenditure of approximately €571 million.
Of Cyprus’s share, €125 million is expected to be paid by the government through five annual instalments of €25 million from the state budget.
The remaining amount will be recovered through charges on consumers’ electricity bills once the cable becomes operational.
Guaranteed investor return of 8.3% for 17 years
Lemonaris explained that the interconnector’s regulatory framework provides for a guaranteed return on invested capital of 8.3% during its first 17 years of operation.
This will fall to 4.6% for the following 18 years, with the investment capital recovered over a total period of 35 years.
In practice, Cyprus and Greece will need to cover not only the annual operating costs, which will be divided equally, but also repayment of the invested capital together with the applicable return.
Under the agreed allocation, Cyprus will bear 63% of the investment’s capital costs and Greece 37%, including the applicable rates of return.
According to Lemonaris, the cable has an economic lifespan of 35 years but could remain operational for 50 years, provided it is properly maintained.
Completion delayed until 2031 as costs remain uncertain
The project’s original completion date was 1 January 2030.
“We have already received a letter from Nexans, forwarded to us through the project promoter, referring to a delay until 1 January 2031,” Lemonaris said.
The revised schedule represents a one-year delay, while the overall cost remains uncertain.
“The data shows that €1.9 billion is not enough. Where the figure will end up is an unknown quantity. CERA cannot speculate, but it is certain that it will be more than €1.9 billion. We are awaiting the completion of the marine surveys, which affect the cost,” he said.
During the discussion, the Attica–Crete electricity interconnection was cited as an example. Its initial estimated cost of approximately €700 million eventually rose to €1.2 billion, an increase of 71.4%.
How much submarine cable has been manufactured?
Lemonaris outlined the project’s progress using information from a report dated 12 August 2026.
The Cyprus–Crete interconnection is estimated to require approximately 900 kilometres of submarine cable, although this is not a final figure because further seabed data is still pending.
The progress report included the following figures:
- Construction of 280 kilometres of submarine cable has been completed in two batches, measuring 170 kilometres and 110 kilometres respectively.
- Production of 232 kilometres of submarine cable suitable for installation at significant depths has been completed.
- Production of 10 kilometres of cable connecting the offshore section to the onshore substation has been completed.
- Marine surveys covering 60% of the route have been completed, leaving 40% outstanding.
During the parliamentary committee meeting, it was stated that the remaining 40% of marine surveys concerns the section intersecting the area covered by the illegal Turkish-Libyan memorandum.
Regulators to monitor progress every two to three months
Lemonaris said the project promoter, Greece’s Independent Power Transmission Operator (IPTO), is required to submit progress reports to the Greek and Cypriot regulatory authorities every two to three months.
“If there is a delay compared with the implementation schedule for reasons other than force majeure, it is the responsibility of the regulatory authorities to ensure the investment proceeds, taking measures according to the circumstances,” he said.
He clarified that the ownership and operation licences for the Crete–Cyprus interconnection have been issued to IPTO, which remains the project promoter. CERA has received no application for a change.
Regarding Meridiam’s proposed acquisition of 66% of the GSI company, CERA and Greece’s Regulatory Authority for Waste, Energy and Water (RAAEY) jointly sent a letter to IPTO on 26 August requesting clarification.
According to Lemonaris, no response has yet been received.
Who pays if the interconnector project is cancelled?
The CERA chairman explained that European regulations and the framework of understanding provide for the possibility of terminating the project, with different procedures depending on the circumstances.
He outlined three scenarios:
- Force majeure: The regulatory authority takes measures to mitigate the impact.
- Fault of the project promoter: Each country’s regulatory authority independently assesses the losses and considers possible measures and compensation.
- Geopolitical risk: Reasonable expenditure incurred by the project promoter is divided equally between Cyprus and Greece, with each country bearing 50%.
IPTO’s €302 million expenditure request
For the Crete–Cyprus section of the interconnection, an arrangement was agreed for payments of €25 million annually, capped at €125 million.
According to Lemonaris, IPTO submitted a request covering €302 million in expenditure for 2025, of which CERA approved €82 million in July 2025.
He clarified that the €82 million in recognised expenditure falls within the €125 million to be paid by the Republic of Cyprus through five annual instalments of €25 million.
DISY asks whether EU funding can increase
House Energy Committee chairman and DISY MP Nikos Georgiou asked whether Cyprus could seek additional EU funding beyond the existing €657 million grant, given the increase in the project’s estimated cost.
Lemonaris replied that such a move would first require a formal request.
“What we do know, however, is that €657 million is the largest grant ever awarded for an electricity interconnection. I imagine an effort will be made at ministerial level, but CERA cannot answer that,” he said.
AKEL raises concerns over foreign control
AKEL general secretary Stefanos Stefanou raised concerns about ownership of the electricity interconnection and the potential implications for Cyprus’s energy security.
He questioned whether the project could fulfil its geostrategic objectives if control passed to third parties who could consequently influence electricity supply and generation.
“Could the owner, which is a private company, even be bought by Turkey? Is there a risk that tomorrow Cyprus’s electricity supply could be controlled by someone else rather than the Republic of Cyprus?” he asked.
Stefanou requested clarification on the regulatory safeguards and whether Cyprus would retain a say in decision-making.
Lemonaris explained that CERA conducts checks to identify beneficial owners and has the right to exercise a veto on national interest grounds.
“If something does not operate within the legal framework, or if someone attempts to impose restrictions, certainly when the operator is a company with foreign interests, we have less control than if it were a Cypriot company,” another CERA member added.
A further CERA representative explained that the licensing framework for electricity interconnections contains national security provisions that can be activated if the ultimate beneficial owner is identified.
“Therefore, if we establish that the ultimate beneficial owner, provided we can identify them, is linked to national security concerns, restrictions may be imposed,” the representative said.
European Investment Bank study raises questions
Regarding the anticipated technical and economic study by the European Investment Bank (EIB), Lemonaris said Cyprus and Greece had approached the project promoter to request financing from the bank.
“The study is being carried out on behalf of the bank, not Cyprus and Greece,” DISY MP Nikos Georgiou stressed, with the CERA chairman confirming this was the case.
AKEL general secretary Stefanos Stefanou argued that no one had provided clear answers on whether the project’s implementation would ultimately benefit citizens, society and the economy.
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