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The economy will recover with the government’s support
The economy will recover with the government’s support
The plans on energy, commerce and investments
Ms Natasa Pilides Minister of Energy, Commerce and Industry
An exclusive interview of the Minister of Energy, Commerce and Industry Ms Natasa Pilides to ICPAC magazine “Accountancy Cyprus”.
In her interview she expresses her optimism that the measures taken by the government to support businesses and households will help the economy recover.
She also talks about recent developments in the fields of energy, commerce and investments.
When should we expect the drilling programme in the Cypriot Exclusive Economic Zone to restart?
It is unfortunate that the pandemic, which has had such a big impact on all of our lives, has also affected adversely the global oil and gas industry. Covid-19 has led to shrinking demand of all energy sources, including natural gas, and this, in turn, has resulted in a crash in prices, placing the global oil and liquefied natural gas (LNG) market in a period of surplus. Most major companies have been forced to drastically cut spending on new projects or postpone research activities and in this new environment of restrictions on movement, closed borders and the need to mitigate health risks to personnel, it was very unlikely that the Exclusive Economic Zone (EEZ) of the Republic of Cyprus would be the exception. Indeed, our licensees Total, Eni, ExxonMobil and Qatar Petroleum, have rescheduled their drilling programmes (exploration and appraisal) for the 2nd half of 2021, but even so, we are fortunate in that, unlike other countries, we have not had any project cancelations or abandonment of our EEZ by any company. On the contrary, we are working closely with all our licensees, assessing different scenarios based on the pandemic’s progress, to ensure that all processes are in place for their programmes to recommence in a safe way in 2021.
Do you think that our country could become a hub of natural gas in the area?
Cyprus’ strategic location in the Eastern Mediterranean, at a close proximity to the Suez Canal, make it ideally suited to become an important energy player in the region, both for electricity interconnections and for natural gas. Already, the oil and gas industry in Cyprus also includes support companies servicing hydrocarbon activities in the wider East Med region. Of course, for Cyprus to become a natural gas hub, additional gas discoveries have to be made in our EEZ and in the region as a whole, essential for ensuring the viability of multibillion euro export projects such as the EastMed Pipeline, an EU Project of Common Interest supported by Cyprus, Greece and Israel, as well as the planned onshore LNG terminal at the Vasilikos area. The key, therefore, is an aggressive exploration programme in our EEZ, which, as I have explained earlier, will restart in the 2nd half of 2021. Currently, Cyprus has three natural gas discoveries in its EEZ: “Aphrodite” at 4.5 Tcf, “Glaucus” at 5-8 Tcf and “Calypso” that is still under appraisal. “Aphrodite” gas, according to the field’s development plan, will be send, via an underwater pipeline, to the Idku LNG plant, in Egypt, for exports to European and global markets.
What is your estimation about the economy in 2021, with the consequences of the pandemic?
With the global health crisis affecting almost all areas of economic activity, including tourism, trade, and professional services, our Government’s immediate priority has been to mitigate adverse effects as much as possible, by implementing targeted fiscal measures intended to protect vulnerable groups of the population, businesses, jobs and incomes. Hopefully, as mass vaccination campaigns begin in Cyprus and the rest of the world, at the start of 2021, restrictions within countries and at external borders, will be gradually lifted, thus allowing for a return to normality. According to recent forecasts by the Ministry of Finance, 2020 will close with a -5,5% GDP growth rate, which considering initial estimates is relatively contained. Unless the pandemic endures, 2021 is expected to mark the start of our economy’s recovery, with a 4,5% growth rate. 2022 and 2023 are expected to follow suit, with 3,5% and 2,8% GDP growth rates, respectively. To assist in our recovery efforts, the Ministry of Energy, Commerce and Industry has proposed Funding Programmes for businesses and households, of around €400 million, for the new Programming Period of 2021-27, with emphasis on greening and digitising the economy. An estimated €90 million will become available within 2021, as we intend to open in the first half of the year, our programmes for SMEs’ in the Manufacturing Sector, the energy upgrade of households and the funding of new businesses and wineries. In the second half of 2021 we will be opening our programmes for the manufacture and trading of agricultural products, as well as the digital upgrade of enterprises.
What are the Ministry’s expectations in the fields of Commerce and Industry for the upcoming years?
The Covid-19 crisis, with its devastating effect on tourism, has amply demonstrated that Cyprus needs to invest in its industry, which still represents 8% of GDP. As such, we have intensified our efforts to enhance both our trade and industry sectors, with measures aimed at providing support, streamlining our processes and boosting our competitiveness. Our goal is to make the transition to a circular economy and resource efficient growth, in line with both the UN’s Sustainable Development Goals, as well the EU’s Green Deal and our shared 2050 decarbonisation goal. To this end, we are currently in the process of modernising Cypriot industry, based on the guidelines set out in the new and cohesive National Industrial Policy 2030 developed by our Ministry. According to the Policy, the sector’s productivity, innovation and exports should increase in the next 10 years, through digitisation, development of new infrastructure and skills, the upgrading of existing competencies, improvement of the business environment and enhancement of access to finance and markets. At the same time, we are also working to strengthen the brand of Cyprus’ products and services and to upgrade our specialised Export Helpdesk, which brings together Cypriot exporters and potential buyers, by utilising the Republic’s 14 Trade Centres abroad (these cover 34 different countries).
How could the government attract investors and in which fields should we focus?
Given the positive outlook for Cyprus’ economy, as described earlier, there are excellent investment opportunities in both new and existing areas, notably in energy, tourism and hospitality, headquartering, shipping, innovation and start-ups, education and investment funds. With its business-friendly environment and multilingual, highly qualified human talent, in recent years Cyprus has been successful in attracting many foreign businesses to set up offices on the island, thus creating new jobs, adding value to the economy and enhancing know-how and expertise.
Cypriot lawyers, accountants, auditors and other specialists, with their high level of experience and qualifications, continue to provide value-for-money, top quality services, to these businesses. The Cyprus Government is committed to further enhancing the business environment, inter alia by facilitating large investment projects and recently establishing a dedicated business service centre, intended to facilitate the process of setting up and scaling in Cyprus, through the provision of expedited, one-stop services, as well as personalised guidance and information on available funding tools. An important part of this business service centre is the new Fast Track Business Activation Mechanism, which we have been operating at the Ministry of Energy, Commerce and Industry since October. As its name suggests, the Mechanism aims at helping companies of foreign interests to set up in Cyprus by completing all necessary registrations and licensing within 7 working days, as well as facilitating the issuance of residence and work permits (4-6 weeks). In addition, our Ministry is also making headway with the upgrade of services offered to businesses by the Registrar of Companies, e.g. by awarding soon a €14 million project for the upgrade of the Department’s digital platform.
