Filenews 5 April 2023 - by Chrysanthos Manoli
The confusion caused in recent days whether or not the Government intends to extend the subsidy on electricity consumption, which ends at the end of April based on the latest decision of the Anastasiades Government, led AKEL yesterday to issue a statement calling on the new Government to clarify its intentions.
Although there is no official information on the duration of a possible extension of the subsidy, nor on the period that will apply, Phileleftheros' information states that the subsidy will apply for the two months of May - June and will be at the same level and under the same conditions provided for the subsidy that is currently in force.
In order for a supplementary budget for the new subsidy to be submitted and approved by Parliament, the Ministries of Finance and Energy are already working. It is estimated that the cost of the May and June subsidy will be around €30 million. The cost for the March-April subsidy is expected to close slightly below. It is estimated that the total cost of the tiered electricity subsidy measure (which started to apply from September 2022) until April will amount to approximately €95 million.
The subsidy benefits about 449,000 homes, 111,500 businesses, as well as water pumps for water supply and irrigation.
Fell... relatively
The decision to extend the subsidy does not seem to be affected by EAC's forecast that in the next electricity bill there will be a 6.5% reduction in the kilowatt-hour charge, due to the receipt of fuel oil loads at lower prices than the previous period.
The price of oil per metric ton supplied to EAC is still much higher than before the crisis caused to the markets by the pandemic and the invasion of Ukraine.
For the period April '23 the weighted average fuel price is €869 per metric ton (last year in April it was €845), compared to €931 euros in March and €910 in February '23.
During 2022, the explosion in the price of EAC fuel occurred in the summer quarter, with the weighted average price slightly exceeding €1,000 per metric ton. 2022 ended (December) with an average fuel price of €975. However, in January 2021, before the problems in the global supply chain and the increase in demand began due to the receding of the pandemic, the average fuel price of EAC was €393, rising to €705 euros in November 2021 and to be kept at high levels, with some ups and downs, until today.
It is difficult to continue the reduction in fuel
In contrast to the extension for another two months of the electricity subsidy, information from the government front indicates that there will probably be no more extension to the reduction of excise duty on fuel.
Based on the latest amendment of the law by Parliament, the reduced tax will apply until May 4. The reduction concerns 8.3 cents a litre on petrol and diesel, including VAT, and 6.4 cents a litre on heating oil, including VAT. Given the global concern about an imminent upward trend in the price of oil following the new production cut by OPEC+ countries, it is not excluded that the Government will at a later stage have new thoughts about reintroducing the reduced consumption tax, if retail prices rise again.
Since March 2022, when the reduction in consumption tax began, it is estimated that by May 4, the cost to state coffers will approach €100 million.
It is worth noting that in March 2022, when the reduction in excise duty began, the average price of 95 octane unleaded petrol was €1,440 (with a downward trend), while yesterday, the average price nationwide for 95 octane was €1,404.
Follow up, AKEL asks
In a statement yesterday, AKEL's Head of the Economy Sector, Haris Polycarpou, points out that "the Government should clarify what it intends to do in relation to the continuation of the electricity subsidy. The President of the Republic, Nikos Christodoulides, declares his intention to continue the measure, while the Ministry of Foreign Affairs. Finance has no plans to expand it."
Elsewhere, Mr. Polycarpou states that "in the supplementary budget for 2023, brought before Parliament by the Government, there is no provision for expansion. If this is the final position of the Government, then its first basic act of economic policy will have a clear orientation at the expense of society.
