VZCZCXRO6755
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHNC #0910/01 3190748
ZNR UUUUU ZZH
P 150748Z NOV 07 ZDK
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC PRIORITY 8318
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC 0047
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHBS/USEU BRUSSELS
RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS SECTION 01 OF 02 NICOSIA 000910 
 
SIPDIS 
 
SENSITIVE 
 
AGRICULTURE FOR FAS 
 
BRUSSELS FOR FCS AND FAS 
 
ATHENS FOR FCS AND FAS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD SENV CY
SUBJECT: CYPRUS: WATER SUPPLY BAD NOW - WORSE NEXT YEAR 
 
 
NICOSIA 00000910  001.2 OF 002 
 
 
(U) This cable is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) There has been no significant rainfall in Cyprus since 
March, 2007.  As a result, reservoirs are down to about 8 percent of 
capacity - down from over 25 percent full this time last year. 
While anticipated winter rains should avoid any immediate water 
shortages, the severely stressed ground water supply will be fully 
depleted by the middle of next summer unless the rains are 
exceptionally good this winter and spring.  The GoC is working 
toward additional desalinization projects to ward off major supply 
problems, but it is unlikely that these will come on-line by summer 
¶2008.  End Summary. 
 
Crisis - But The Rains Will Come 
-------------------------------- 
 
¶2. (SBU) On November 9, Post Econ Officer and Econ Specialist met 
with Christodoulos Artemis, Director, GOC Water Development 
Department (WDD) to discuss the current water shortage on the 
island.  Artemis explained that demand for water had been increasing 
at an average of three or four percent per year in recent years, 
almost double the forecast rates and far outstripping the 0.5 
percent annual increase in population.  Increased per capita water 
consumption, coupled with a string of very dry winters, have 
resulted in the present water shortage.  He described the present 
water situation as "critical," although he showed no signs of alarm. 
 He was confident that, "sooner or later," the annual winter rains 
would bring some badly-needed relief.  He also outlined for us 
(below) what his department is doing to deal with the situation. 
 
Everything's Dammed 
------------------- 
 
¶3. (U) Cyprus ranks number one among European countries in terms of 
the number of dams, measured both by number per square kilometer and 
per capita.  The country has a total of 108 dams (56 of them 
classified as large dams), most of them built after independence 
from the British in 1960.  The total holding capacity of these dams 
is 327 million cubic meters of water and Artemis claims there are, 
effectively, no additional sites available to be dammed.  And yet, 
for all these dams, Cyprus is facing a severe water supply problem. 
After an unusually long and hot summer, and three largely rainless 
winters, the dams are now down to less than eight percent full, 
containing only enough water for the next three months at current 
rates of usage. 
 
Desalination 
------------ 
 
¶4. (SBU) Cyprus has two desalination plants (one in Larnaca and one 
in Dhekelia) producing enough water to satisfy 50 percent of the 
domestic supply network.  The remaining 50 percent of domestic 
supply needs are met by surface water and boreholes.  The eastern 
part of the island enjoys an interconnected water supply system. 
Artemis claims that this system could easily be extended to Limassol 
but that Paphos (on the west coast) is likely to remain off the 
water grid. 
 
¶5. (SBU) Artemis called attention to two tenders for water projects, 
designed to mitigate the water shortage: (a) a tender for a 
pre-engineered water desalination unit to be floated offshore and 
supply water for a three-year period.   The deadline for submitting 
tenders was November 12 -- a U.S. firm (SeaStar Energy) has made a 
bid; (b) over the next few weeks, the WDD expects to invite tenders 
for a fixed desalinization plant in Limassol.  The plant is 
anticipated to come on line in two- three years.  These two projects 
are expected to increase existing domestic desalinated-water 
producing capacity by 25 percent.   According to the WDD, the 
Electricity Authority of Cyprus, which has a virtual monopoly on the 
local energy supply market, will be in a position to supply the 
extra electricity required to run these facilities. 
 
¶6. (SBU) Additionally, the WDD plans to negotiate increased 
production from the existing Dhekelia plant, and there are also 
vague plans for inviting tenders for a new desalination plant for 
Paphos in the future.  The WDD had planned for additional plants to 
be available by now, however, following heavy rains three years ago 
filling the dams to capacity and the need to reduce government 
expenditure as a condition to EU accession, the government put off 
any additional desalination plant construction until now. 
 
 
NICOSIA 00000910  002 OF 002 
 
 
Worse In The North? 
------------------- 
 
¶7. (SBU) Although not an expert on water in the north of Cyprus, 
Artemis guessed that the "TRNC" must face an even graver situation, 
given their limited dam capacity and lack of desalination plants. 
Efforts in the past to bring in water from Turkey in large balloons 
have failed, while a long-time plan to construct a water pipeline 
from Turkey has remained on paper.  Limited amounts of water do 
cross the buffer zone: Famagusta's water supply comes partly from 
the south.  Also, some water from Morphou in the north crosses to 
the south, via Nicosia city's network but then goes back north to 
Famagusta.  Nicosia's sewerage system (largely built before 1974), 
has components in both parts of the island: Nicosia's effluent is 
channeled north of the Green Line, where it gets processed at the 
Mia Milia treatment plant. 
 
Pricing 
-------- 
 
¶8. (SBU) Agriculture in the Republic, generating only about 3.2 
percent of GDP, absorbs 69 percent of total water consumption. 
Tourism, which contributes around 20 percent of GDP, absorbs about 5 
percent of total water used.  Artemis did not agree with the 
assessment, submitted by many foreign water experts, that water for 
agriculture is under-priced.  He said that its current low price 
(about CP 0.10 or USD 0.25) per ton, reflected the fact that the 
infrastructure used to supply this water is much older and, thus, 
fully depreciated by now.  By contrast, water for household 
consumption is sold at CP 0.45-CP 1.10 (USD 1.12-USD 2.75 per ton). 
(He deemed any suggestion of adopting a more "holistic" approach to 
water pricing and consumption, to reflect present realities and 
address the apparent imbalance, was beyond the scope of our 
discussion.) 
 
Demand Management 
------------------ 
 
¶9. (SBU) Artemis noted that his department was very committed to 
demand-management measures.  Among the measures already in use he 
listed: (a) rising block tariffs for water (i.e., the higher the 
consumption, the higher the rate at which it is billed); (b) a 
policy of recovering the full financial cost of water produced (even 
though some experts disagree that this is the case in Cyprus); (c) 
public information campaigns to reduce waste (even though such 
campaigns have not been much in evidence recently).  Despite these 
measures, Post has noted rampant waste of water among the public on 
many occasions, including the traditional watering of the sidewalks 
and patios (to keep down dust).  Wasting water is subject to fines, 
but this is rarely enforced. 
 
¶10. (SBU) The WDD is responsible for about 70 percent of water used 
in Cyprus, typically servicing cities, large villages, and 
agriculture, through an interconnected domestic supply network.  The 
WDD sells the water to local water boards and they, in turn, sell it 
to consumers.  However, the WDD is facing financial difficulties as 
a result of long delays in payments by local water boards. 
Additionally, water rates are kept artificially low in some 
municipalities as a result of legislative difficulties (changes in 
water rates need to be approved by the House of Representatives). 
The remaining 30 percent of water needs are covered by private or 
municipal boreholes and other small community projects. 
 
¶11. (SBU) Comment: With fields now largely fallow and the end of the 
hot weather (and attendant masses of tourists), the country should 
be able to make it through the winter and spring with only modest 
rainfall.  But next summer could be difficult and, if water 
rationing begins during the height of the tourist and planting 
seasons, Cyprus' economy and image could suffer heavy blows.  Given 
the typical delays in awarding tenders here, we have little 
confidence that additional desalination capacity will be on line in 
time to address any shortages during 2008. 
 
SCHLICHER