French fund can prove a game-changer for Cyprus-Greece power linkup

The deal concerning the Greece-Cyprus power link, between Greece’s Independent Power Transmission Operator (ADMIE) and French investment fund Meridiam, reported by Bloomberg on Thursday, was on Friday confirmed by Kathimerini, citing sources from Paris. However, neither party has officially announced the agreement yet.

The deal specifically involves Meridiam entering as a strategic investor in the Great Sea Interconnector (GSI), the entity responsible for the electricity interconnection between Crete and Cyprus. Meridiam will hold a 49.9% stake, securing five seats on the venture’s board of directors, while ADMIE will retain a 50.1% stake and six seats.

Kathimerini understands that the agreement, which further envisions the eventual extension of the interconnection to Israel, also includes the potential to attract additional investors to the GSI project, enhancing its prospects amid ongoing negotiations between Greek and Cypriot authorities. This deal could prove to be a pivotal development for a project that has appeared stalled for some time.

Fresh momentum

The French fund, which manages $22 billion in assets and operates in over 25 countries with more than 125 infrastructure projects, has been in talks with ADMIE for several months about its involvement in the Crete-Cyprus interconnection project. These talks gained momentum following the intergovernmental agreement between Greece and Cyprus in September and the meeting between French President Emmanuel Macron and Greek Prime Minister Kyriakos Mitsotakis in October.

France’s strong interest in the interconnection project is partly driven by the involvement of French industry leader Nexans, which is constructing the submarine cable, representing 25% of its current backlog. Nexans is also awaiting the final order from ADMIE for this crucial part of the project.

The involvement of Meridiam further solidifies France’s stake in the project, which is expected to enhance its geopolitical significance and serve as a strategic “shield” in the laying of the submarine cable.

Geopolitical concerns have been a key issue for Meridiam. According to Paris-based sources, before finalizing the agreement with ADMIE, Meridiam sought assurances from the Greek government that issues related to seabed surveys, which have been delayed due to Turkish objections, would be resolved soon. Additionally, Meridiam secured assurances of continued support for the project from the French presidency.

Financing issues

The implementation of the agreement requires the resolution of regulatory challenges related to the financing of the €1.9 billion project, €657 million of which is covered by European funding. The French company is also awaiting a positive response from the European Investment Bank (EIB), which is currently conducting due diligence on a €500 million loan requested by ADMIE.

Ensuring support from Cyprus, which has a direct stake in the project, is also a condition for Meridiam’s equity participation. According to sources, Meridiam plans to visit Cyprus soon, accompanied by ADMIE, for meetings with Cyprus’ regulatory authority, CERA, and the Cypriot government in an effort to build trust and ensure the project’s success.

What primarily concerns Meridiam is not Cyprus’ equity stake in GSI but the issuance of pending regulatory decisions by CERA and its Greek counterpart, RAAEY. Without these decisions, the project cannot secure financing from banks.

Geopolitical considerations

The key factor determining the project’s future, however, remains the geopolitical situation. Since mid-October, the ship chartered by Nexans for seabed surveys has been unable to enter international waters. These sounding surveys are critical for determining the exact route of the submarine cable. According to all parties involved, the ship’s entry into international waters would resolve both financial and technical issues, providing the necessary momentum for the project to proceed.

The French side also regards the technical aspects of the project as high-risk, as no cable has ever been laid at depths of 2,000-3,000 meters, which spans nearly two-thirds of the distance between Cyprus and Crete.

Attention now turns to the stance Cyprus will take regarding Meridiam’s agreement with ADMIE for a 49.9% stake. Developments on this matter are expected during a meeting next Friday in Athens between Mitsotakis and Cypriot President Nikos Christodoulides.

Source: pagenews.gr