Cyprus’s parliament on Monday approved legislation stripping the energy regulator of the right to issue private licenses for natural gas supplies, allowing authorities to control future imports.
The legislation is the first step in declaring the Cypriot market “emerging,” a status which would allow the island to control supplies through the creation of a public utility company, or a preferred supplier.
Cyprus now relies solely on heavy fuel oil to fire its energy grids, but is under commitment to the European Union to introduce natural gas by 2009.
The legal provision to circumvent the energy regulator came after angry debates in parliament regarding the future of the market, and misgivings from the government about excluding the watchdog.
“Parliament and the government had the same aim, to declare the market emerging. But in the government’s case, it wanted the regulator to maintain its role in being able to issue and to revoke licenses and declare the market emerging once the natural gas got here,” a government source told Reuters.
Cyprus has set up a public utility, known as DEFA, which would be allowed to import and sell gas.
Charilaos Stavrakis, chairman of the electricity authority EAC, said it would hold a 39 percent stake in DEFA. Parliament’s decision, he said, effectively endorsed the views of the EAC which had disagreed with the issuing of private licenses in the interim period before DEFA became fully operational. “This (legislation) closes a loophole which could have been exploited at the expense of the EAC,” he told Reuters.
The island, a member of the EU since 2004, needs to wean itself off its reliance on the heavy fuel oil firing its power grids, emitting the carbon dioxide blamed for climate change.