RRF funds in jeopardy as EAC-CyTA deal goes sour

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A deal by one state-owned company to supply electricity smart meters to another state utility has been challenged by a special court that ruled the contract as unlawful, with €35 mln in European taxpayers’ funds in jeopardy.

The Electricity Authority of Cyprus’ plans to install smart meters that would help consumers regulate their electricity consumption, is in limbo along with a €35 mln EU grant, as the authority faces legal hitches.

The development comes after the administrative court decided to prohibit the Cyprus Telecommunications Authority (Cyta) from being awarded the tender, saying it was not in the telco’s remit.

Despite several delays and early warnings from the state auditor regarding the legality of awarding the tender to CyTA, as well as the previous validation of the contract by the tenders review board earlier in the month, the EAC was confident that it would be able to start installing smart meters after the summer holidays.

By September, the aim was for the EAC to have received 50,000 meters and installed 15,000. By June 2026 all 400,000 meters were to have been received and 250,000 installations completed.

EAC chairman George Petrou told state radio CyBC on Wednesday that the decision took the EAC by surprise.

Petrou explained that the EAC now has no option but to appeal to the Supreme Court and request an extension from the EU, as the multi-million grant is at stake.

Some €35 mln have been earmarked for smart meter installation in Cyprus from the EU’s recovery and resilience fund (RRF), but this funding is now uncertain, raising concerns over additional costs for the public.

As per the commitments made by the Republic to the EU regarding the RRF, the agreement with the supplier of the 400,000 smart meters was expected to be finalised by the end of March, with the contract signed.

In an attempt to explain how the EAC ended up in this predicament, Petrou argued that CyTA was the only bidder capable of providing the required meters, while other bidders failed to meet the specifications.

Highest priced

Although three companies showed interest in the tender, CyTA submitted the highest-priced offer, which the EAC board deemed the most suitable, setting off alarm bells at the Auditor General’s office.

The companies left out of the bidding contested the eligibility of CyTA to provide smart meters. Petrou stated that the EAC is pursuing two actions: appealing to the Supreme Court and seeking an extension from the European Commission.

He said the EAC’s legal advisors anticipate that a court decision could take up to six months.

“This development is deeply concerning, particularly since the review board has upheld the contract with CyTA,” Petrou said.

This development will, adversely, affect the EAC’s competitiveness once the energy market if fully liberalised, argued Petrou.

He said that alternative options are being explored as Cyprus’ transition to a greener economy cannot proceed without smart meters, as neither the EAC nor consumers will have direct view of their electricity usage to manage consumption effectively.

“This means households won’t be able to adjust usage during periods of low tariffs, and EAC staff will still need to conduct meter readings manually, undermining the authority’s goal of reducing energy costs,” said Petrou.

EAC consumer bills already charge €1 per household or meter for its staff to conduct the reading.