Fuel prices set to soar in April

The Consumer Protection Service on Friday reminded the public that fuel prices are set to rocket at the beginning of April when government subsidies come to an end.

Motorists will see, to start with, an 8.3 cent hike per litre on petrol and diesel and 6.3 cents on heating oil as of April 1. There is also a possibility of another five cents being added if the cabinet and parliament manage to push through a proposed new green tax, which is expected to increase yearly from 5 cents this year to 7 cents per litre in 2025 and to 10 cents in 2026 and 25 cents by 2033.

According to the draft law for the imposition of a carbon tax on fuel, which was put to public consultation on Wednesday, the finance ministry’s aim is for the proposed green tax on fuel to come into force from April 1.

If this is achieved on time, fuel prices are expected to go up by at least 14-15 cents per litre, with gas station owners publicly warning of further potential increases due to the receipt of more expensive fuel loads.

The director of the consumer protection service at the commerce and energy ministry Constantinos Karageorghis told the Cyprus News Agency on Friday that at midnight on March 31″the return of the consumption tax on fuel is expected”.

He said the hikes would be mitigated somewhat by the fall in global oil prices in the last quarter, which had now stabilised a couple of weeks ago. The other bit of good news, according to Karageorghis is that Cyprus is among the EU countries with the cheapest fuel in the bloc based on the European Price Observatory.

Regarding the green tax bill, he said the public consultation on the bill was recently completed and “it is expected that the specific taxation will be introduced in 2024”.

This would be accompanied by compensatory measures decided by the ministry of finance. However, compensatory measures are usually with vulnerable groups in mind.

Also speaking to CNA on Friday, the head of the petrol dealers association Savvas Prokopiou said the end of the fuel subsidy was coming at a very difficult time “because at the same time we expect a new burden on the retail price of fuel from the imposition of green taxation”.

“So, consumers as well as our own businesses, will soon, within ten days, be burdened with an extra cost of about 14 cents which is very significant on top of the existing price,” he said, adding that the total increase in fuel prices would come to around 10 per cent.

He noted that things generally become difficult when the retail price goes beyond €1.50 per lite because it’s a “psychological barrier” for consumers. According to the authorities, despite the anticipated increases, prices are not expected to surpass the record set in July 2022, when they peaked at €1.83 per litre.

Last time the government tried to end the subsidy in late 2023, motorists began to travel to the north en masse to fill up their tanks. This saw the government scrambling to think of ways to stop it happening. The reintroduction of the subsidy, as called for by some political parties, eased the situation for a period but it may raise a new headache when consumers think the pump prices are too high in the government-controlled areas.

Prokopiou also called on the government to change the law for when the new prices come into effect. Currently the law says prices much change at midnight but he said it needed to be changed to 6am when petrol stations open. This would prevent a run on the petrol stations between midnight on March 31 and 6am on April 1.