Government surrender over energy price surge

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While consumers brace for another wave of energy and fuel price hikes, the government is throwing in the towel, claiming it has run out of ammunition to contain costs.

Finance Minister Constantinos Petrides was quoted by Phileleftheros daily on Tuesday saying: “There are no ways to reduce the cost of electricity substantially, and the government should focus on palliative measures for vulnerable groups”.

“We are entering a new era, the characteristic of which will be the high price of fuel and electricity since it is produced from fossil fuels,” said Petrides.

He argued that this new situation is not only due to the war in Ukraine and the pandemic but also a conscious policy of the EU to decarbonise the economy, including higher taxes on hydrocarbons.

“People should know that even higher taxes on conventional fuels are being promoted and planned, which will push prices even higher.”

Petrides said that is why governments of EU states have been urging the public to save on energy.

“We must all acknowledge that we are entering an era with more expensive electricity, and the only thing the state can do is to implement policies to prevent energy poverty, with targeted relief measures for low-income groups”.

He underlined that “horizontal tax relief measures on energy are against the EU’s green transition policy.

“Some countries have already imposed or are considering imposing additional taxes to prevent high energy consumption”.

Petrides pointed out that Cyprus has gone in the opposite direction, bringing down VAT on electricity bills from 19% to 9% across the board and 5% for low-income groups, despite criticism from economists.

The government has unfurled a road map for pushing the economy down a greener path.

“Hundreds of thousands of euros are earmarked in the state budget and through the National Recovery Plan for various projects to improve the energy efficiency of buildings, to install photovoltaic systems in homes and businesses”.

Petrides did acknowledge that Cyprus is lagging compared to fellow EU members in Renewable Energy Sources projects.

“It’s not just us, though. Other countries have not pushed forward with RES projects and are now rushing to catch up.”

President Nicos Anastasiades held a meeting last week to find long-term solutions to high carbon fuel costs, focusing on RES.

“Decisions were made for significant investments by the EAC to upgrade the transmission and distribution network and facilitate the installation of more RES, including private individuals.

“This must now be a priority for the state.”