Burdening consumers with cost of profiteering a ‘crime’

Anticipated changes to electricity and fuel subsidies are expected to be announced on Wednesday following the meeting of the council of ministers.

“Fiscal responsibility requires for the state to not merely look at what to cut but also at what revenues it ought to be receiving and how to distribute those,” Chairman of the Consumer Association, Marios Droushsiotis, told the CyBC.

Speaking on CyBC’s Wednesday morning programme Droushiotis brought up the windfall profits still enjoyed by RES producers, who are earning 20 to 22 cents/kW when they should be earning 6 to 8 cents, according to the consumer association chair.

Droushiotis said a thorough investigation is in order and the practice of “transitional” producers locked into contracts getting higher rates per kW than the 11 cents/kW set by the Energy Regulatory Authority (Raek) ought to be examined.

Additionally, the state stands to gain €75 million from the reintroduction of the excise tax on fuels and this ought to be redistributed to consumers to provide relief from the ongoing exorbitant electricity costs.

“It is criminal to dump the cost of profiteering onto consumers,” Droushiotis said.

Head of the Chamber of Commerce (Keve), Marios Tsiakis, speaking on the same programme, told CyBC that the reintroduction of fuel tax was logical given the drop in costs.

The labour and welfare departments need to work out targeted support measures for the most affected demographic, he said.

Businesses cannot be subsidised for electricity costs as they are not considered to be beneficiaries, however, Tsiakis said, the state should examine with the EU Commission whether there is any possibility for leeway on the rate of fuel taxes, as they are set very high in Cyprus.

Minister of Finance Makis Keravnos on Tuesday told the Cyprus News Agency (CNA) he was in favour of targeted measures, focusing on vulnerable groups of the population.

The minister stated that the support measures were intended to be temporary, and as fuel prices have dropped compared with March 2022, reintroducing the tax on fuels is warranted.

“The government’s permanent policy is to support vulnerable groups of the population, and this will be weighed in the debate during the ministerial council,” Keravnos added.

Regarding the electricity subsidy, the minister said that the government’s decision will rest on options for targeted measures.

Despite the fact that the entire population has been hit by recent setbacks, including the pandemic, which justified the implementation of horizontal measures, nonetheless today the situation is “completely different” the minister said.

Fiscal responsibility requires the measures to be precisely targeted “to those who need them and when they need them,” the minister added.