More than a year after an expected production order, the Great Sea Interconnector—a project to link the electricity grids of Greece, Cyprus, and Israel—has seen little progress as it deals with unresolved financial arrangements and deposit guarantees, casting uncertainty over its future viability.

A recent article in Vima, a Greek newspaper, spelled out the problems encountered by the project that trace back to mid-2023 when the original developer sought a financing increase to €1.9 billion from Greek and Cypriot regulators due to cost overruns. Although a long-delayed contract with French cable manufacturer Nexans was signed for the Crete-Cyprus segment, EuroAsia Interconnector soon declared it could not make the required advance payment, further jeopardizing progress.

To prevent collapse, the Greek and Cypriot governments intervened, asking Greece’s Independent Power Transmission Operator (IPTO) to assume responsibility for the project. The European Commission endorsed this move, expressing confidence in IPTO’s ability to deliver. By October 2023, IPTO was officially in charge, and the project-renamed the Great Sea Interconnector-finally entered the implementation phase after thirteen years of planning.

Despite this momentum, significant challenges persisted through 2024. Construction of the first phase began in December 2023, with Nexans instructed to secure production slots and initiate procedures. However, in July 2024, the Cyprus Energy Regulatory Authority issued a ruling that upended the project’s financial framework by rejecting recognition of a reasonable return, revenue, or cost recovery during construction. This decision severely undermined the project’s economic viability.

Compounding the situation, the Cypriot government did not fulfill its commitment to acquire a stake in the project, despite earlier assurances that a decision would be made by January 2024. After months of negotiations, Greece and Cyprus signed a bilateral

agreement in September 2024 to accelerate the project, overturning the July regulatory decisions and providing a more sustainable foundation for development.