Given the large drop in fuel prices compared to a year ago the ending of the VAT on fuel is justified, the president of the Cyprus Consumers Association said on Monday.

The electricity subsidy, by contrast, should continue, as the reasons for its imposition still apply, Marios Drousiotis told the Cyprus News Agency (CNA).

Drousiotis noted that the return of the consumption tax means a price hike of 8.3 cents for petrol and diesel and 6.2 cents for heating oil. The association said the end of the subsidy is justified because since July 12, 2022, when the highest fuel prices were recorded, petrol has decreased by 45 cents a litre, diesel by 62 cents and heating oil by 51 cents.

Regarding the abolition of the electricity bill subsidy, Drousiotis noted that it is neither appropriate nor justified as it would mean adding €70 on the average bill.

“This subsidy cannot be abolished, for two reasons. First, electricity remains at very high prices… since July 12 it has only fallen by around 7 per cent. The reasons [for the subsidy] unlike fuel, have not been eliminated,” Drousiotis said.

Secondly, he added, the state is largely responsible for the high price of electricity due to policy failures of it and its authorities over the last decade.

“Because [the state] did not do its job right, we are now paying these prices and paying €250m a year for emissions,” Drousiotis said.

He said the consumers association has been calling for two years for an investigation to assign responsibility for who brought about this state of affairs resulting in consumers paying hundreds of millions for electricity.

According to Drousiotis the percentage added to electricity bills for EU fines that are in this way paid by consumers could be avoided.

Meawhile, the association of petrol station owners has said it is in favour of continuing the tax freeze on fuels.

President of the association Savvas Prokopiou told CNA that reduced fuel prices should remain due to competition from low prices in the north.

“We have a very serious problem [because of] a huge difference with prices [in the north],” Prokopiou said, noting that the association has called for the government to reduce the difference to eliminate the problem.

He added that prices should be at even lower levels, which is why petrol dealers are in favour of continuing to suspend excise taxes.

Minister of Finance Makis Keravnos had previously stated that the government will study the matter carefully and is expected to decide on the issue in the coming days, emphasising the temporary nature of the measures.

The period for imposing reduced consumption tax on fuels ends on June 30.