All day yesterday and on Tuesday, Cyprus faced rolling electricity outages as employees of the state-controlled electricity utility staged strikes to protest against a privatisation programme agreed with international lenders. The centre-right government hopes to push through legislation this week loosening the state’s grip on electricity generation, telecommunications and port facilities, despite a looming split with its nationalist coalition partner. Parliament is due to vote on the bill today. Unions at the Electricity Authority of Cyprus (EAC), the state power authority, warned households and businesses to cut electricity consumption or risk longer blackouts.
Last Monday, EAC workers cut off the power supply to the Cyprus parliament and clashed with police while the house finance committee was discussing the privatisation bill. EAC union chief, Andreas Panorkos, said: "Privatisation would bring disaster to us, our families and all Cypriots. Electricity would cost more, not less. Our struggle is for the good of all the people.’’ A banner hanging over EAC’s headquarters in Nicosia read "Not for Sale”.
Following the protest, finance minister Harris Georgiades said: "We will make every effort to achieve the broadest possible consensus in parliament for this bill.” Mr Georgiades added that the bill would be amended to safeguard employees’ pension rights, while union representatives would sit on committees supervising the privatisations – concessions that the governing Democratic Rally party hopes will appease both the unions and the Democratic party, its fractious coalition partner.
Cyprus hopes to raise €1.4bn from selling the three state entities under the terms of a €10bn bailout by the EU and International Monetary Fund. Both lenders have stressed the privatisation law should be in place by March 5, when eurozone finance ministers are due to approve another €236m tranche of funding. Cyprus won praise from international lenders following their latest monitoring mission to Nicosia this month, after outperforming fiscal targets thanks to "prudent” budget execution. The country has suffered a less severe recession than was forecast after the collapse last March of its two biggest banks resulted in an international rescue, a bail-in of depositors and the eurozone’s first exchange controls.
The outlook in Cyprus is still challenging, with the economy projected to contract by 4.8 per cent this year on top of 6 per cent in 2013. The privatisations, the first to be implemented in the country, are seen as essential to attracting investment and reducing public debt, the IMF said.
