Roundup: International lenders relieve Cyprus of privatization commitment

International lenders have relieved bailed-out Cyprus of its obligation to privatize the state-owned electricity producing operations, the state television said on Friday.

It added that the European Commission, the European Central Bank and the International Monetary Fund, collectively known as the troika, have instead allowed the Cypriot government to break up the Electricity Authority of Cyprus (EAC) in two separate organizations.

One will continue electricity producing and the second one will operate the distribution network.

Cyprus is expected to exit a 10-billion-euro (10.90 billion U.S. dollars) economic adjustment program at the end of March after three years of troika-directed reforms of the economy and the public administration.

State television said the troika communicated to Cyprus on Thursday night its approval to the plan and also accepted a series of factors which could upset the arrangement, such as a solution to the Cyprus problem and developments in natural gas production from an offshore Cypriot well.

The government has to prepare a separation plan for EAC within January and submit legislation to parliament this year before the separation is completed by the end of 2017.

The Council of Ministers is expected to approve on Monday the plan, which has also been endorsed by the Electricity Authority of Cyprus Board.

But EAC staff unions have vowed to oppose any breaking up of the organization, warning that they will take strike action.

The approval of the plan by the troika opens the way for the eventual release of a tranche of up to 500 million euros, which will be the eighth and last installment of the loan money promised to Cyprus.

This will bring the total amount received by Cyprus to 7.5 billion euros, leaving 2.5 billion euros which Cyprus will not need to cash as its economy has fared far better than projected by international lenders.

It recorded a growth of about 2 per cent in 2015, according to preliminary data, after almost four years of deep recession.

Cyprus is still under a commitment to privatize the state owned Telecommunications Authority (CYTA).

The government said it plans to set up a corporation under private law to take over CYTA operations, in which the state will own the majority of share capital.

The eastern Mediterranean island has gone ahead with privatizing port operations.

It is expected to announce in March the successful bidders to take up three separate sectors at the port of Limassol. Endit