The Cypriot cabinet decided on Thursday to introduce a subsidy that will cover part of the increase in electricity rates.
As Minister of Finance Constantinos Petrides stated, the subsidies will be made available for residential, commercial and industrial consumers and will cover between 50% and 100% of the hikes. The new support package amounts to 50 million euros.
Specifically, 449,000 households and 111,500 businesses will benefit. For household consumers the subsidy will cover 100% of the upcoming electricity price increase for vulnerable population groups, up to 85% of the upcoming increase for consumption from 1-400 kilowatt-hours, up to 75% for consumption of 401-600 KWh and up to 50% for consumption of 601-800 KWh.
For commercial use it will cover up to 85% for consumption from 1-500 KWh, up to 75% for consumption of 501-750 KWh and up to 50% for consumption of 751-1,500 KWh. For electricity meant for industrial use the grant will cover up to 85% of the increase in 1-750 KWh consumption, up to 75% for consumption from 751-1,000 KWh and up to 50% for consumption from 1,001-1,500 KWh.
The finance minister noted that these are horizontal and targeted measures that will serve the middle classes and vulnerable population groups while also promoting energy savings. This is very important, as he mentioned, as “electricity and energy prices will remain at high levels, the permanent solution is saving and integrated planning in terms of complete independence from fossil fuels.”
He also mentioned that the value-added tax on electricity is returning to 19%, however, and this will be covered by state sponsorship.
“So the state’s sponsorship will cover two parts, the percentage of the increase but also the VAT,” he said, explaining that the aid takes a different form. “Instead of lowering the VAT, this difference will be subsidized by the state,” he said, adding that in the invoices that will be sent in September, there will be a 20% to 30% reduction depending on the tariff it falls under.
Petrides explained that the subsidy will be paid directly to the Electricity Authority of Cyprus, consequently, the bill citizens receive will display the initial cost of the electricity, the amount of the state subsidy given for the particular group category and then the amount that the customer pays.