The European Commission on Thursday gave a positive assessment of Cyprus’ modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €1.22 billion – €0.2 billion in loans and €1.02 billion in grants.
Cyprus’s REPowerEU chapter consists of two new reforms, five scaled-up investments drawing on five existing measures, and two new investments to deliver on the REPowerEU Plan‘s objectives to make Europe independent of Russian fossil fuels well before 2030 by diversifying away from fossil fuels, the commission said.
Changes to Cyprus’ original plan going beyond the newly added REPowerEU chapter concern 28 reforms and 50 investments. These changes are based on the need to factor in objective circumstances hindering the fulfilment of certain measures as originally planned, including the high inflation experienced in 2022 and 2023 and supply chain disruptions caused by Russia’s war of aggression against Ukraine.
It also modifies the downward revision of Cyprus’ maximum Recovery and Resilience Facility (RRF) grant allocation, from €1.01 billion to €0.92 billion, following the June 2022 update to the RRF grants allocation key.
“This reduction reflects Cyprus’ comparatively better economic outcome in 2020 and 2021 than initially foreseen. As a result, a number of investments have been removed from the plan or downsized, although most of them will continue to be supported with national funds,” a commission statement said.
As a result of the addition of a REPowerEU chapter, the modified plan has a stronger focus on the green transition, devoting 45 per cent – up from 41 per cent in the original plan– of the available funds to measures that support climate objectives.
The two new reforms it includes will significantly contribute to the green transition by enabling the uptake of renewable energy projects in the country, facilitating the rollout of electric vehicles and enabling final consumers to actively participate in the electricity market.
“One new investment and three upscaled investments should significantly contribute to reduced primary energy consumption and increased energy savings in many public and private buildings,” the statement added.
One upscaled investment “should incentivise businesses and individuals” to shift to zero-emission vehicles and thus reduce consumption of fossil fuels for transport, whereas two investments – one upscaled, one new – will increase the number of businesses engaged in research and innovation (R&I) activities feeding into the green transition.
Cyprus’ modified plan’s ambition also devotes 24.6 per cent – up from 23 per cent– in the original plan of its funds to support the digital transition.
The European Council now has four weeks to endorse the commission’s assessment.
The council’s endorsement will allow Cyprus to receive 20 per cent in pre-financing of the REPowerEU funds. Under the RRF, Cyprus has so far received €242 million: €157 million in pre-financing and €85 million disbursed for the first payment.
The commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in Cyprus’ revised recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.