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Minister under fire for rising pump prices

Taking flak from several quarters, Energy Minister Giorgos Lakkotrypis sought on Tuesday to downplay coming price hikes on automotive fuel after he ordered fuel companies to increase the biofuel concentration in petrol and diesel.

Lakkotrypis had issued the relevant ministerial decree last Friday, which sets out an aggregate target of 7.3 per cent use of renewables in transport. The current penetration of renewables in the sector is about 5 per cent.

It would still fall short of Cyprus’ binding target for 2020 for 10 per cent use of biofuels in the transport sector to comply with the EU’s 2009 Renewable Energy Directive.

The ministry admitted that going up to 7.3 per cent would affect fuel prices at the pump, but not by much.

It estimates a retail price hike of between 2 and 2.5 cents per litre for unleaded 95 petrol, including taxes and duties.

The ministry said it anticipates no significant price increase for automotive diesel.

It also clarified that, contrary to media reports, the 7.3 target set by the decree must be attained by December 31 of this year.

Nevertheless, even including the increase, Cyprus would still be the fifth least expensive country in the EU in terms of unleaded 95 petrol.

EU figures show that consumer prices for unleaded 95 in Cyprus are currently the fourth least expensive in the EU28.

The average consumer price here is €1,183 per litre, compared to the weighted EU28 average of €1,440.

In parliament on Tuesday, Lakkotrypis said the remaining 2.7 per cent (10 minus 7.3) of the target would likely be made up by ‘buying’ excess renewable energy from another country.

“At the moment we are looking at the possibility of statistical transfers,” he told MPs.

Under the EU’s renewable energy directive countries struggling to reach their target can arrange statistical transfers, where one county sells a specified amount of energy from renewable sources to another. The transaction is only in statistical terms, with the volume of energy taken from one country’s calculations of renewables in final energy consumption and added to the other’s.

Lakkotrypis said that whereas Cyprus may be forced to ‘buy’ renewable energy for the transport sector that does not necessarily translate into a net cost, because the island could ‘sell’ renewable energy from other sectors where it has an excess, under the same statistical transfer scheme.

He cited the example of heating and cooling, where Cyprus has already exceeded the 2020 renewables target of 23 per cent.

But he was panned by opposition lawmakers, with Akel forecasting instead a 5 cents per litre increase for both petrol and diesel.

Once again, consumers will be saddled with the rising cost of fuel, the party said.

It accused the government of inaction, for example for having failed to promote liquefied petroleum gas or electrical cars.

Moreover, Akel questioned assurances that Cyprus will meet its binding targets, otherwise leading to a carbon ‘fine’ from the EU likewise hitting taxpayers.

Earlier, the Cyprus Consumers and Quality of Life Union said the European renewables directive and associated targets have been known for a decade.

It slammed the state for acting at the last minute rather than introducing renewables in transport over time and softening the impact on consumers.

Chiming in, the association of petrol station owners called the ministry’s measures a damp squib, since thousands of Greek Cypriots cross to the north anyway to fill up their cars.

If anything, the association said, the new price hikes will encourage even more fuel purchases from the north, further hurting their own revenues but also defeating the very purpose of having ‘cleaner energy’.

Asked whether checks at crossing points need to be stepped up, Lakkotrypis said the matter would be discussed with Customs and the foreign ministry.

“It is something that we must think on because, whereas the Republic is striving to meet its obligations regarding the EU’s green targets, the same does not apply in the north.”

It’s understood that diesel prices are not expected to rise significantly from the ministerial decree, given that biofuels are already mixed in with automotive diesel.

Where petrol is concerned, the concentration of biofuels can be increased only marginally for technical reasons.

Industry sources explained that biofuels are strong conductors of moisture. Higher temperatures – as is the case with the climate in Cyprus – create more moisture, which negatively impacts the quality of fuel.

 

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