By Andria Kades
While the Electricity Authority of Cyprus (EAC) is extending its power supply to the occupied north for another 20 days, Turkish Cypriots have asked not to pay VAT, it emerged on Friday.
Daily Politis reported that VAT has become an issue as the two sides negotiated payment for the supply of power that started on New Year’s Day following a request.
The government denied there was an issue.
On Thursday, Turkish Cypriot leader Mustafa Akinci asked President Nicos Anastasiades if the supply could be extended by 20 days, a request which was duly granted, government spokesman Nicos Christodoulides said.
The Green Line Regulations stipulate that tax needs to be paid, he added.
“The first time we gave them electricity was in 2006. It was paid with VAT and it is the same model that is being applied again.”
Asked if Cyprus paid tax in 2011 when the Turkish Cypriots supplied the south with power after the Mari explosion, Christodoulides said “they didn’t charge VAT.” But the difference is the Republic is a recognised and has obligations towards the European Union.
Transmission system operator director Christos Christodoulides said supply was going to continue while the EAC from their part told the Cyprus Mail their role was to simply implement government decisions and they had nothing to do with the tax.
The commercial part is dealt between the EAC and their Turkish Cypriot counterpart KIBTEK who agree the payment with the approval of energy regulator CERA. The VAT however, is something decided by the government.
The decision to link the two grids was taken in May as part of a series of measures to build confidence between the Greek and Turkish Cypriot communities.
The Turkish Cypriot power production is suffering from various problems, including fuel supply.
Initially, Turkish Cypriot authorities refused to renew private company AKSA’s license due to high sulphur levels in their fuel, which exceeded three per cent.
The company decided to stop production due to a fuel shortage, with KIBTEK saying AKSA would not be producing energy until the problem was resolved.
Nevertheless the company was eventually allowed to unload fuel containing 3.5 per cent sulphur in a bid to prevent problems with supply.
Due to adverse weather conditions, fuel cannot be imported to the breakaway state before January 22, it was reported, but a filter had been installed at the Gastria station to limit sulphur emissions to one per cent – the standard of fuel used in the Republic.