Fuel and electricity costs to rise as relief measures expire (Updated)

Fuel and electricity prices are set to rise as of July 1 following expiration of the relief measures for consumers introduced last year.

According to Finance Ministry permanent secretary, George Panteli, an evaluation by the ministry shows that the measures are no longer justified, since fuel prices have dropped to below March 2022 levels.

The inflation control measures–a freeze of VAT on motor fuels and electricity–were initially introduced in July 2022 through to the end of the year with two extensions, in September 2022 and April 2023.

The government is now gearing up to do away with the tax reduction although Disy and Akel MPs have called for another extension.

Panteli, however, told Alpha News that as of July 1 the price of motor fuels will return to normal, which means an increase of approximately 8 cents per litre.

As for electricity bills, Panteli said the reintroduced excise tax on fuel for electricity production will apply here too. Relief from other charges burdening consumers, such as emissions fines, are to be re-examined in autumn, according to the ministry rep.

Based on today’s fuel prices and if indeed the cabinet decides to discontinue the relief measures, the average price of 95 octane unleaded petrol and diesel, will rise from the current €1.38 per litre to € 1.46 cents per litre.

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

According to a European Commission newsletter, the average fuel price in effect on March 7, 2022, before the tax reduction was introduced, was €1.43 per litre for unleaded 95 octanes, €1.49 per litre for diesel, and €1.22 per litre for heating oil.

Following the expiration of the relief measures, Akel slammed the government for the consequent rise in fuel price anticipated by Panteli, calling it “a serious challenge for society”.

The party on Wednesday said the decision not to extend the relief measures “will place an even greater burden on households and businesses already on their knees, at a time when public coffers are overflowing with excess profits from increased VAT and excise duty revenues”.

“Despite the drop in fuel prices, increases in prices, interest rates and housing costs are here to stay. The decision to abolish the relief measures sends the message that the government is indifferent to the real state of family budgets.”

“Faithful to the policy of the Anastasiades government, Christodoulides neither wants nor can face the truth, as he is following the orders of the International Monetary Fund (IMF), which wants to scrap support measures for the entire society.

On Monday, meanwhile, the Supreme Court ruled that the two relief laws for fuels were unconstitutional as they violate the separation of powers.