Government wobble over ending fuel, electricity subsidies

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The government will decide this week whether to continue a freeze on consumer tax on fuel and a subsidy on electricity bills under pressure from petrol station owners.

The relief measures introduced to buffer hiking inflation are set to expire on July 1, which would see fuel prices shoot up by eight cents per litre, and a €68.72 discount on electricity bills scrapped.

It is the third time President Nikos Christodoulides’ administration will review the measures, with the government in favour of stopping them.

In recent comments, Energy Minister George Papanastasiou argued, “It became clear that continuation of the reduced consumption tax on fuel is no longer justified”.

He said pump prices today had decreased to approximately the levels of March 2022, when the freeze on consumption taxes on fuel was introduced.

The government’s decision had met criticism, as prices were at the same point when the measure was deemed necessary to ease inflation.

Finance Minister Makis Keravnos said that authorities would review the measures carefully, noting that prices have dropped significantly.

He said the electricity subsidy is also under review, with more chance of approval, but will probably be halved.

And they emphasized that the support measures should be temporary.

Based on today’s fuel prices, from July 1, the average price of 95 octane unleaded petrol and diesel will rise from €1.38 per litre to €1.46 a litre.

Also, the average price of heating oil will increase by around 6.2 cents per litre to €1.04 per litre, up from 0.98 cents.

The measures were last extended in May, under fierce pressure from parliament, which passed a law continuing the measures, bypassing President Christodoulides.

Under pressure, even from his parties, the President decided not to veto the law.

Meanwhile, Christodoulides is also under pressure from petrol stations, demanding that the government intervene to stop consumers from heading to the occupied north for cheaper fuel.

Tanker drivers were set to descend on the capital Tuesday, moving towards the Ayios Dhometios crossing.

They demand that authorities check Greek Cypriot motorists returning to the south to see if they have filled up in the north.

Petrol station owners claim that revenues have dropped 30% to 40% in Nicosia and 40% in Famagusta.

The lowest price recorded for Unleaded 95 octane on Monday was €1.323/litre found at a station in Nicosia.

The lowest price for unleaded 98 octane is in the district of Nicosia at €1.393/litre.

Regarding diesel, the lowest price was also in Nicosia at €1.313/litre without any change since the end of May.