Consumers brace for fuel price shock

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Motorists in Cyprus will feel a pinch in their wallets, as petrol prices are set to jump by 14 cents per litre overnight on April 1, when a government subsidy comes to an end and a green tax is a step away from being introduced.

Beginning April 1, motorists can expect an initial increase of 7 to 8.3 cents a litre for motor petrol and diesel, along with a 6.3c hike on heating oil, the Consumer Protection Service warned on Friday.

Constantinos Karageorghis, the director of the consumer protection service at the Energy Ministry, told the Cyprus News Agency (CNA) that the reinstatement of the consumption tax on fuel is anticipated at midnight on March 31.

Additionally, there is a potential for another 5c increase if the proposed new green tax is approved by the cabinet and parliament.

The draft law for the implementation of a carbon tax on fuel, which underwent public consultation on Wednesday, aims for the green tax to be enforced from April 1, resulting in an anticipated rise of at least 14-15 cents a litre in fuel prices.

Karageorghis said that the conclusion of the public consultation is close, and expects its introduction within 2024, accompanied by compensatory measures mainly targeting vulnerable groups.

The green tax is projected to escalate annually, starting from 5c this year, reaching 7c per litre in 2025, and eventually climbing to 10c in 2026 and 25c by 2033.

The Energy Ministry official noted that while crude oil prices have recently stabilised after a decline in the last quarter, Cyprus still ranks among the EU countries with comparatively cheaper fuel.

Pricier shipments

Meanwhile, petrol station owners have also cautioned about possible further increases due to the procurement of pricier fuel shipments.

Savvas Prokopiou, head of the petrol station owners’ association, expressed concerns about the end of fuel subsidies coinciding with the imposition of green taxation, confirming that a hike of 14c per litre is in the cards.

He urged the government to amend the law to change the effective time of price adjustments from midnight of 31 March to 6 am on 1 April, to prevent a rush on petrol stations during the transition period.

Lastly, Prokopiou highlighted the challenges consumers face as prices have already tested the psychological barrier of €1.50 a litre, but authorities assure that even with the expected hikes, prices will not surpass the record set in July 2022.

The fuel tax exemption was introduced in March 2022 to buffer a hike in petrol prices.

Under the cost-of-living measure, 7 cents a litre is reduced from the price of petrol, 8.3 cents for diesel and 6.4 cents for heating oil.

In March 2022, when the reduction in consumption tax started, the average price of 95 octane unleaded petrol was €1.44.

Prices at the pump on Friday were on average €1.412 for a litre of 95 octane petrol, €1.508 for a litre of diesel, and €1.067 for a litre of heating oil.