IPTO, Greece’s power grid operator, and Euroasia Interconnector, both vying to secure control of the construction of Crete’s major interconnection, linking the island’s grid with Athens, held an initial meeting yesterday, six days into a ten-day deadline set by the Greek and Cypriot regulatory authorities for energy for an agreement.

The Greek and Cypriot regulatory authorities are being pressured by the European Commission to push for a solution.

According to energypress sources, IPTO took the initiative and extended an invitation to Euroasia Interconnector, which agreed to a first round of talks. Even so, no progress appears to have been made at this first session. Both sides are believed to have stuck to their initial positions.

At yesterday’s meeting, IPTO presented Euroasia Interconnector a shareholders agreement based entirely on the details included in a Memorandum of Understanding (MoU) signed by the two sides last October. It envisions a stake of at least 51 percent for IPTO in the project, 39 percent for Euroasia Interconnector, and 10 percent for private-sector investors. Euroasia Interconnector pledged it would offer a response to this plan within the next few days.

The MoU foresees the establishment of a special purpose vehicle (SPV) by IPTO and Euroasia Interconnector for the project’s financing and development. This appears to be a pivotal detail keeping the two sides apart.

Euroasia Interconnector contends that it is responsible for the project’s construction and has noted the SPV should only concern financial aspects.

The Euroasia Interconnector consortium insists it was formed to link the Greek, Cypriot and Israeli power grids via a Crete interconnection as an entire project, adding it has already been classified as an EU Project of Common Interest (PCI). As a result, Euroasia not only holds priority rights over the Cretan section of the overall interconnection project but has an overall responsibility as well, Euroasia Interconnector contends. Euroasia has noted it only recognizes ACER, the European Agency for the Cooperation of Energy Regulators, as a supervisory body.

Euroasia Interconnector has already reached a partnership agreement with Belgium’s ELIA and contends it can fully cover the project’s entire financing needs, a claim that remains unsubstantiated. The credit ability of Euroasia Interconnector represents a key factor in any future agreement for collaboration between IPTO and Euroasia Interconnector. IPTO has already made significant progress in this faculty following the recent signing of a 200 million-euro loan agreement, at a favorable interest rate, with the Bank of China and ICBC.

At a meeting last week, European Commission officials clearly favored the Greek and Cypriot regulatory authorities as the two bodies responsible for handling the dispute. This means that commitments based on decisions already made by the two regulatory authorities should remain valid.

On the one hand, Euroasia Interconnector has been granted a license for the overall project under the condition that the Crete-Athens interconnection will be co-developed with IPTO, while, on the other, IPTO has already included the Crete-Athens interconnection into its ten-year plan under the condition it collaborates with Euroasia Interconnector.

If the dispute is not settled soon, both sides could loose their existing rights to the project, which would require a restart of the entire procedure, an authority told energypress.