Cyprus-Forum.com

[DT.]

it has historically made a profit for the state

When you just increase the price to cover your out of controll costs, you are bound to make a profit!

Here's what I don't understand whenever someone throws that statement out "its been making a profit for the state for years!" The profit basically means that it has charged the citizens of Cyprus more than its overheads are. Now when a state owned company does that isn't that effectively a tax? A more accurate statement should've been "we've been paying for the cost of the electricity and AHK's overheads (including the senior mgt's limo's, the employee benefits long after they're gone and the salaries for employees that have never gone to work there e.g Pambos the new head coach for the national team who until recently was earning 300k from AEL while officially employed and paid at CYTA.) and above that we have also been contributing to an indirect tax from the state regarding our power consumption.

Why else would a state owned company make a profit?

[Tim Drayton]

it has historically made a profit for the state

When you just increase the price to cover your out of controll costs, you are bound to make a profit!

I am not disputing that but, given that the market was liberalised in 2003 as a precondition for EU accession, why has a private company not moved in and exploited this situation by undercutting EAC, if it really can be done?

As a freelancer operating from Cyprus in a very competitive market with tight deadlines that clients expect to be met, my overriding need is for a 100% reliable electricity supply and, pre-Mari, I got that from EAC, with not a single unscheduled outage in seven years and at least one weeks' prior notice in the form of a postcard hand delivered to my mail box of any scheduled power cuts for maintenance purposes, and to me this was the biggest competitive advantage that Cyprus had to offer. The fact that it costs a bit more than other places - and we are hardly talking a fortune, my last bill was €58.68 for two months' consumption of 262 kWh - is of secondary importance. As somebody who actually lives here and needs a reliable electricity supply, my motto is "If it ain't broke, don't fix it". Perhaps if you are a free market zealot living thousands of miles away, things look different.

[Tim Drayton]

it has historically made a profit for the state

When you just increase the price to cover your out of controll costs, you are bound to make a profit!

Here's what I don't understand whenever someone throws that statement out "its been making a profit for the state for years!" The profit basically means that it has charged the citizens of Cyprus more than its overheads are. Now when a state owned company does that isn't that effectively a tax? A more accurate statement should've been "we've been paying for the cost of the electricity and AHK's overheads (including the senior mgt's limo's, the employee benefits long after they're gone and the salaries for employees that have never gone to work there e.g Pambos the new head coach for the national team who until recently was earning 300k from AEL while officially employed and paid at CYTA.) and above that we have also been contributing to an indirect tax from the state regarding our power consumption.

Why else would a state owned company make a profit?

Yes, it is effectively a tax, and so what? Overall taxes have been/still are to a lesser extent very low in Cyprus - another competitive advantage that this place used to offer - and still does to a lesser extent - so if the government collects a bit of tax through stealth, and from offering an excellent service, I am all for it. My last electricity bill for two months was €58.68. Come on, you would be lucky to get away with that for a meal for two nowadays in Cyprus! We are not talking a fortune.

[DT.]

it has historically made a profit for the state

When you just increase the price to cover your out of controll costs, you are bound to make a profit!

Here's what I don't understand whenever someone throws that statement out "its been making a profit for the state for years!" The profit basically means that it has charged the citizens of Cyprus more than its overheads are. Now when a state owned company does that isn't that effectively a tax? A more accurate statement should've been "we've been paying for the cost of the electricity and AHK's overheads (including the senior mgt's limo's, the employee benefits long after they're gone and the salaries for employees that have never gone to work there e.g Pambos the new head coach for the national team who until recently was earning 300k from AEL while officially employed and paid at CYTA.) and above that we have also been contributing to an indirect tax from the state regarding our power consumption.

Why else would a state owned company make a profit?

Yes, it is effectively a tax, and so what? Overall taxes have been/still are to a lesser extent very low in Cyprus - another competitive advantage that this place used to offer - and still does to a lesser extent - so if the government collects a bit of tax through stealth, and from offering an excellent service, I am all for it. My last electricity bill for two months was €58.68. Come on, you would be lucky to get away with that for a meal for two nowadays in Cyprus! We are not talking a fortune.

So let me get this straight, you're alright with an overinflated cost base so that we can hire every political party affiliated and unqualified individual that Kyprianou of AKEL or Omirou of EDEK order them to, as long as the income is also inflated so as to provide a profit for the firm's owner i.e the government.

[Maximus]

it has historically made a profit for the state

When you just increase the price to cover your out of controll costs, you are bound to make a profit!

Here's what I don't understand whenever someone throws that statement out "its been making a profit for the state for years!" The profit basically means that it has charged the citizens of Cyprus more than its overheads are. Now when a state owned company does that isn't that effectively a tax? A more accurate statement should've been "we've been paying for the cost of the electricity and AHK's overheads (including the senior mgt's limo's, the employee benefits long after they're gone and the salaries for employees that have never gone to work there e.g Pambos the new head coach for the national team who until recently was earning 300k from AEL while officially employed and paid at CYTA.) and above that we have also been contributing to an indirect tax from the state regarding our power consumption.

Why else would a state owned company make a profit?

Yes, it is effectively a tax, and so what? Overall taxes have been/still are to a lesser extent very low in Cyprus - another competitive advantage that this place used to offer - and still does to a lesser extent - so if the government collects a bit of tax through stealth, and from offering an excellent service, I am all for it. My last electricity bill for two months was €58.68. Come on, you would be lucky to get away with that for a meal for two nowadays in Cyprus! We are not talking a fortune.

This is the average monthly electricity + gas bill for someone living in a flat in the UK isn't it?

[Maximus]

So let me get this straight, you're alright with an overinflated cost base so that we can hire every political party affiliated and unqualified individual that Kyprianou of AKEL or Omirou of EDEK order them to, as long as the income is also inflated so as to provide a profit for the firm's owner i.e the government.

They will have to raise taxes or introduce other stealth taxes somewhere else to make up for the shortfall if they are not collecting revenue from their semi-government orgs.

[Tim Drayton]

it has historically made a profit for the state

When you just increase the price to cover your out of controll costs, you are bound to make a profit!

Here's what I don't understand whenever someone throws that statement out "its been making a profit for the state for years!" The profit basically means that it has charged the citizens of Cyprus more than its overheads are. Now when a state owned company does that isn't that effectively a tax? A more accurate statement should've been "we've been paying for the cost of the electricity and AHK's overheads (including the senior mgt's limo's, the employee benefits long after they're gone and the salaries for employees that have never gone to work there e.g Pambos the new head coach for the national team who until recently was earning 300k from AEL while officially employed and paid at CYTA.) and above that we have also been contributing to an indirect tax from the state regarding our power consumption.

Why else would a state owned company make a profit?

Yes, it is effectively a tax, and so what? Overall taxes have been/still are to a lesser extent very low in Cyprus - another competitive advantage that this place used to offer - and still does to a lesser extent - so if the government collects a bit of tax through stealth, and from offering an excellent service, I am all for it. My last electricity bill for two months was €58.68. Come on, you would be lucky to get away with that for a meal for two nowadays in Cyprus! We are not talking a fortune.

So let me get this straight, you're alright with an overinflated cost base so that we can hire every political party affiliated and unqualified individual that Kyprianou of AKEL or Omirou of EDEK order them to, as long as the income is also inflated so as to provide a profit for the firm's owner i.e the government.

OK, maybe I am prepared to hold my nose and look the other way as long as I get an uninterrupted power supply and it doesn't cost the earth. The alternative is for global capital to get its hands on the national electricity grid and run it as a monopoly. I do not view that prospect with glee and would rather have the devil I know.

[DT.]

OK, maybe I am prepared to hold my nose and look the other way as long as I get an uninterrupted power supply and it doesn't cost the earth. The alternative is for global capital to get its hands on the national electricity grid and run it as a monopoly. I do not view that prospect with glee and would rather have the devil I know.

Now we're getting somewhere. Do you agree however that a private equity fund that would've taken a macro look at the economy and done some simple maths leading it to the obvious conclusion that energy output is GDP related. And if GDP increases then so will the output and effectively the profits of the power company. If we agree here then here's what we learnt in business school, you don't kill your client base. You encourage the growth of the economy by providing competitive energy regardless of whether you're in competition with someone or alone. Because the truth is you are never alone, you're client base is made up of a port that needs to compete with another port that uses a different power company, your client base is an airport that needs to compete as a hub with another airport in the region thats also supplied by a different company. If your clients don't do well then your investment won't either.

Now chances are that whoever takes over in the privatisations the money will come from pension funds or private equity funds. Typically they have an investment horizon of 7 years, which means in 7 years this firm better be in a better position than how they found it in order to realise their investment back with an acceptable return.

Now in all these points where a private investor can show that their interests are aligned with their consumers, can you give me ONE instance where a political party has its interests aligned with the people of Cyprus? (you do know that the parties run the power, phone and port companies. Right?)

[Tim Drayton]

What you say makes sense. On the other hand, Cyprus' infrastructure is undoubtedly far better than that of any other country in the Eastern Mediterranean. Maybe it is naive, but I can't help feeling that the Cypriot way works, or at least worked up until Mari, after which everything has a kept on going downhill. As they say, if it ain't broke, don't fix it. Or perhaps now it is broke and it needs fixing.

[Paphitis]

it has historically made a profit for the state

When you just increase the price to cover your out of controll costs, you are bound to make a profit!

Here's what I don't understand whenever someone throws that statement out "its been making a profit for the state for years!" The profit basically means that it has charged the citizens of Cyprus more than its overheads are. Now when a state owned company does that isn't that effectively a tax? A more accurate statement should've been "we've been paying for the cost of the electricity and AHK's overheads (including the senior mgt's limo's, the employee benefits long after they're gone and the salaries for employees that have never gone to work there e.g Pambos the new head coach for the national team who until recently was earning 300k from AEL while officially employed and paid at CYTA.) and above that we have also been contributing to an indirect tax from the state regarding our power consumption.

Why else would a state owned company make a profit?

Are you serious?

I was knew there was a lot of corruption but this is ridiculous!

You must be exaggerating, right?