By Elias Hazou and Jonathan Shkurko
Opposition parties on Monday kept up the pressure on the government over its unpopular decision to scrap subsidies on electricity and on fuel, while at the same time there appeared some relief for consumers with an anticipated drop in fuel prices at the pump due to falling crude prices globally.
Akel again censured the government, pointing out that “while state coffers and banks are raking in revenues, people are being asked to tighten their belts.”
The communist party accused President Nikos Christodoulides of turning a deaf ear to people’s financial problems despite his paying lip service to the issue.
“There is no excuse for the government’s decision. Public finances can cope, and in addition the European Commission would have allowed the measures [the subsidies] to have continued,” said Akel.
“Reality is implacable – at a time when state coffers, banks and energy companies amass windfall earnings and mega-profits of hundreds of millions of euros, the government is asking people to tighten their belts.
“But how will households and middle-sized business withstand the increases in electricity and fuel, the cost of living?”
The party called for the subsidies to be reinstated.
And in a statement of their own, the Greens said Cypriots should brace for “a new wave of expensiveness” following the administration’s decision to end the subsidies.
“The measures, for as long as they lasted, had given a great deal of relief to consumers and households,” the statement read.
“What we expected from the government was to roll out new strategies, not end the current measures, particularly at this difficult time in summer when temperatures are rising. Rising electricity and fuel prices, low incomes and residences with poor insulation will steadily lead to increasing the number of people suffering due to energy poverty.”
The subsidies ended over the weekend, leading to a scramble among motorists crossing over to the north to fill up their cars. The government defended its decision, citing fiscal considerations – although President Nikos Christodoulides appeared to leave open a window for revisiting the matter.
The scrapping of the fuel subsidies caused prices at the pump to rise by about 8.3 cents a litre for Unleaded 95, and 6.2 cents a litre for diesel.
Answering journalists’ questions, Christodoulides said the fuel subsidy – first introduced back in July 2022 – was always understood as a temporary measure and that it had to end at some point.
“I fully understand the dissatisfaction that exists, it is very logical that there is this dissatisfaction, and all this will be evaluated again,” the president said.
“You will understand that the facts before us are very specific. At the same time, the government has taken specific decisions, whether it concerns VAT or other decisions, because this is our first concern, how to meet citizens’ expectations, especially at this difficult juncture. All this will be evaluated.”
Meantime also on Monday a consumer advocacy group revealed some good news on the way for consumers.
Marios Droushiotis, head of the Cyprus Consumers Association said a coming decline in fuel prices at the pump would partially offset the hikes.
“The scrapping of the subsidies was expected,” Droushiotis told the Cyprus Mail. “Since last summer, the price of fuel has decreased, so there was no justification for the government to extend the subsidies.”
But he said that despite an immediate spike in the cost of 95 octane, diesel and heating oil with the end of the VAT subsidy, the trend will show a slight downward trajectory.
“Early signs point towards a slight reduction in the price of fuel, about 3 cents per litre in the next few days,” he offered.
He added that prices are likely to drop even more throughout the summer, “although we cannot be sure for the time being.”
Droushiotis added that doing away with the subsidies might not necessarily translate into a chain reaction of price increases in other products, despite the cost-of-living crisis in Cyprus and abroad.
“That said, the government must make sure that the additional levies are also used to help those in need.”
Moreover, he said that the benefits of the reduced rate of VAT on fuel were not fully felt by consumers, but added that they were certainly beneficial.
Average fuel prices now stand at €1.47 per litre of 95 octane, €1.49 for diesel, and €1.04 for heating oil.
Regarding electricity subsidies, Finance Minister Makis Keravnos last week said future support will be narrowed down to vulnerable households and farmers who use pumping stations to water crops.
Vulnerable groups include those receiving Guaranteed Minimum Income, disabled persons, those unable to work, single parents, large families, people on disability pensions and the unemployed.
Responding to criticism from the opposition which maintained that state finances could have allowed for the fuel subsidies to continue, Keravnos said: “I believe we are better placed to know the situation of our public finances.”
The price of petrol will soon decrease by approximately 3 cents per litre, just days after an additional 8.3 cents per litre was added on petrol, the president of the Cyprus Consumers Association Marios Droushiotis said on Monday.
The reason is a drop in the price of oil internationally which will partially offset cabinet’s scrapping of the reduction in VAT on fuel last week.
The average fuel prices now stand at €1.47 per litre of 95 octane, €1.49 for diesel, and €1.04 for heating oil.
Cabinet also tightened subsidies on electricity bills, a move which is likely will cost the average household about €70 every two months.
“The scrapping of the subsidies was expected,” Droushiotis told the Cyprus Mail. “Since last summer, the price of fuel has decreased, so there was no justification for the government to extend the subsidies.”
Droushiotis said that despite an immediate spike in the cost of 95 octane, diesel and heating oil with the end of the VAT susbidy, the trend will show a slight downward trajectory.
“Early signs point towards a slight reduction in the price of fuel, about 3 cents per litre in the next few days,” he said.
He added that prices are likely to decrease even more throughout the summer, “although we cannot be sure for the time being.”
Droushiotis added that the scrapping of the subsidies might not necessarily translate into a chain reaction of price increases in other products, despite the cost-of-living crisis in Cyprus and abroad.
“That said, the government must make sure that the additional levies are also used to help those in need,” he said.
Moreover, he said that the benefits of the reduced rate of VAT on fuel were not fully felt by consumers, but added that they were certainly beneficial.
Last week, Finance Minister Makis Keravnos said future electricity bill subsidies will be geared to vulnerable households and farmers who use pumping stations to water crops.
Vulnerable groups include those receiving Guaranteed Minimum Income, disabled persons, those unable to work, single parents, those with large families, people who receive disability pensions and the unemployed.
Responding to a question on criticisms against the government from the opposition which maintained that state finances could have allowed for the fuel subsidies to continue, Keravnos said: “I believe we are better placed to know the situation of our public finances.
“It was clear from the onset that these would be temporary, and would expire at the end of June,” he said.
