Despite the fact that the Board of Directors of the Electricity Authority of Cyprus (EAC) has not yet reached its final decision regarding the request to the Cyprus Energy Regulatory Authority (CERA) for a 6% increase in electricity bills, the Government essentially decided to cover any resulting increases through a staggered subsidy.
This could potentially facilitate the authorities (EAC and CERA) to proceed with imposing the 6% increase. In other words, yesterday’s decision by the Cabinet may herald that price hikes are an irreversible path.
It is reminded that last Tuesday, the management of the EAC had informed the Parliament that there would be updates on its intentions within the next fifteen days.
Yesterday, the Government announced the continuation of the subsidy for the increase in the price of electricity from July 2022, while also extending the reduction in consumption tax by 8.33 cents, although, as officials from the Ministry of Finance had stated in previous days, the current price data did not justify such action.
However, both measures are of shorter duration compared to previous decisions. The staggered electricity subsidy will last for two months, while the fuel tax deductions will be for only 28 days.
According to a competent government source, this is to closely monitor price fluctuations and for the state to intervene as needed.
The Government, as we are informed, is considering other scenarios of measures, which will mitigate the impacts on households and businesses from energy costliness.
With yesterday’s decision of the Cabinet, the staggered subsidy of electricity costs will be in effect from March 1st until April 30th, 2024, covering residential, commercial, and industrial consumers. For vulnerable consumers, the subsidy will cover 100% of the increase in the price of electricity compared to July 2022.
The cost of extending the measure for the billing months of March 2024 – April 2024 amounts to €8 million, without including possible increases in the EAC’s tariffs.
The government’s anti-costliness package, which includes eight measures costing €60 million, is in line with the European Commission’s recommendations for targeted measures. The actions decided to focus on supporting the incomes of 27 thousand families belonging to vulnerable population groups and large families. The one-time support for families will amount to €3 million.
Phileleftheros reported the criteria that families must meet to receive one-time financial support. These are:
- Single-parent families with an annual income of €19,500 and a maximum deposit amount of €10,000. The one-time support is €100 for the first child, increasing by €50 for each additional child, with a maximum amount of €250. Beyond 4 dependent children, an additional amount of €100.
- Family with an annual income of €25,000 and a maximum deposit amount of €15,000. The one-time support will be €100 for the first dependent child, increasing by €50 for each additional dependent child, with a maximum amount of €250. Beyond 4 dependent children, an additional amount of €100.
- One-time support of €100 for 18 thousand households receiving the Minimum Guaranteed Income and not included in the above categories.
Moreover, with the decision to increase the budget by €2 million for the electric vehicle purchase scheme, it is estimated that 100 large families who meet the criteria to receive state sponsorship will benefit.
The reduction of consumption tax on motor fuels, namely unleaded gasoline 95 octanes and diesel, will continue until March 31st, with a budgetary cost of €5 million. It is recalled that the measure currently in force expires on March 3rd.
In the coming days, a relevant bill will be submitted to the Parliament; however, what concerns the government side is whether the parties will want to extend the measure for a longer period through amendment, which would increase the income losses for the state. Today, prices are lower than in 2022 when the tax deduction measure was first implemented. Perhaps this was the main reason why the measure was decided to be continued only for a few weeks.