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Cyprus Implements Ambitious Desalination Projects to Secure Water Supply Amid Historic Drought

by THEFUTURE.TEAM

Facing an unprecedented drought, Cyprus is set to launch a vast portfolio of desalination projects as part of a government strategy to ensure water security. Proposed by Agriculture Minister Maria Panagiotou and approved by the Cabinet of Ministers, the initiative marks the most significant state investment in water infrastructure in over a decade.

Record Investment Reflects National Priority

The comprehensive plan allocates a record €140 million for the purchase of desalinated water by 2026, underlining the government’s commitment to safeguarding drinking water reserves while repurposing dam resources for irrigation. This decisive allocation is designed to counteract the severe water deficits predicted in key districts.

Permanent Installations to Bolster Regional Capacity

Two new permanent desalination facilities are slated for development. The first, scheduled for the eastern region of Limassol, will boast a capacity of 60,000 to 80,000 cubic meters per day, catering to the rapidly growing urban demands that have historically relied on natural sources such as the Kouros dam and groundwater extractions.

The second permanent unit is planned for Dekelia. This replacement project, set to supersede the ageing installation whose contract expires in 2027, will provide 80,000 to 100,000 cubic meters daily. Its strategic location will support water supply needs in both the Ammochostos region and parts of Larnaca, ensuring sustainable access as regional demand escalates.

Mobile Solutions for Immediate Impact

Complementing the large-scale permanent investments, authorities have prioritized the expedited deployment of mobile desalination units. Four projects, already fast-tracked and operational within just three months, will contribute an additional 47,000 cubic meters of water daily by January 2026. In parallel, the Department of Water Development (TAW) is orchestrating the installation of three further mobile units, aiming for operational status before the summer of 2026. Each unit will supply at least 10,000 cubic meters daily for five years.

Strategic Locations for Mobile Units

Deployment plans include:

  • Episkopi (Municipality of Kouros): Situated near British Bases and adjacent to the existing Limassol facility. The tender was announced on 30 September, with contract initiation expected by the end of November and a project delivery timeline of six months, potentially accelerated to four months with performance bonuses.
  • Hellenic Electricity Authority (HEA) at Vassiliko: This unit will operate in tandem with the permanent desalination installation, delivering an additional 10,000 cubic meters daily. The competitive tender is expected to launch by November for a summer 2026 commencement.
  • Ammochostos Free Area: Prioritizing the Agia Napa site, with a subsequent plan for Paralimni – Deryneia, to ensure robust supply to the Protaras tourist district.

TAW will later evaluate the possibility of permanently integrating these mobile units or expanding their capacity and operational duration based on the forthcoming Desalination Feasibility Study.

Enhanced Daily Output and Future Security

Collectively, the seven mobile units (three new and four existing) will add 77,000 cubic meters to the daily water output, surpassing even the combined production of the permanent units at Vassiliko and Paphos. This initiative is projected to boost the proportion of water supplied through desalination by over 32%, ultimately fulfilling 100% of the nation’s water needs. Currently, five permanent plants deliver 235,000 cubic meters each day, covering only 70% of demand.

Crisis Mode: Dwindling Dam Reserves

The Department of Water Development reports that dam levels have tragically fallen to just 10.8% of capacity, compared to 25.9% in the previous year. The Kouros dam, the largest in Cyprus, now registers a mere 9.8% full, a stark drop from 23.5% just last year. This urgent scenario necessitates the rapid enhancement of the nation’s water balance via advanced desalination projects.

Conclusion: A Strategic Turnaround for Cyprus

Minister Panagiotou emphasized that “Cyprus is facing the most severe water scarcity in decades,” and asserted that these projects guarantee uninterrupted access to water for both domestic consumption and irrigation. The government’s forward-looking strategy, emphasizing speed, technological innovation, and environmental stewardship, is set to redefine the nation’s water security framework. With water reserves at historic lows and unpredictable rainfall patterns looming, 2026 is poised to be a landmark year in the sustainable management of Cyprus’s water resources.

Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

by THEFUTURE.TEAM

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.

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