Cyprus diesel prices reached a record high on Friday, with the average price climbing to €1.997 per litre. The Cyprus Consumers Association and the Pancyprian Association of Petrol Station Owners have called on the government to consider reducing VAT on fuel and returning the additional VAT revenue generated by higher prices to consumers.
According to the Consumer Protection Service’s Retail Fuel Price Observatory, diesel is currently selling for between €1.879 and €2.098 per litre. The average price of €1.997 is above the previous record of €1.989, set on 12 July 2022, Cyprus Consumers Association president Marios Drousiotis told CNA.
He said more than 100 petrol stations across Cyprus are already selling diesel for more than €2 per litre.
Heating oil also reaches record high
Heating oil has also been setting records in recent weeks. It is currently selling for between €1.489 and €1.735 per litre, with the average at €1.608.
That is well above the previous record of €1.515 recorded in July 2022.
The average price of 95-octane unleaded petrol currently stands at €1.718 per litre, ranging from €1.613 at the cheapest stations to €1.798. It remains below the record of €1.828 set in July 2022.
Drousiotis estimated that Cyprus diesel prices would cross the “psychological threshold” of an average €2 per litre by Saturday.
He said increases are occurring daily, but when a fuel company announces a price rise, it is not implemented by all petrol stations on the same day. As a result, an announced increase can take two to three days to be fully reflected in prices.
Savvas Prokopiou, president of the Pancyprian Association of Petrol Station Owners, said stations that have not yet raised their prices may implement the increase on Monday rather than over the weekend.
Calls for VAT on fuel to be reduced
Both Drousiotis and Prokopiou urged the government to reduce VAT on fuel as a way of easing the burden on consumers.
Drousiotis said that because of the price increases, the state is receiving an additional 7.5 cents per litre in VAT from petrol, 11 cents per litre from the increase in diesel prices and 12.34 cents per litre from the rise in heating oil prices.
“The state’s additional revenue resulting from the increases should be returned to consumers,” Drousiotis said.
He specifically referred to the expected heating oil subsidy, which he described as “the only way forward”, given an increase of 65 cents per litre since March.
However, he stressed that any subsidy should be structured to ensure it reaches consumers rather than being absorbed by petrol stations.
Drousiotis added that the government could reduce VAT on fuel from 19% to 5%, as it did with electricity, without requiring approval from the European Commission.
He said Cyprus could also apply to the EU for permission to further reduce excise duty on fuel, as Spain and Sweden had done.
“There are alternatives,” he said.
Petrol station owners seek EU-wide action
Prokopiou said that since rising fuel prices have become a Europe-wide phenomenon, “perhaps the time has come for VAT on fuel to be reduced across the EU”, as governments are benefiting from the additional revenue generated by higher prices.
He suggested the process could begin in Cyprus.
If a VAT reduction is not possible, Prokopiou said the government should consider returning the additional VAT revenue to consumers.
He argued that Cyprus lacks “realistic transport alternatives”, pointing to the fact that fuel consumption has not fallen in line with rising prices, as happens in other countries.
“We could ask for an exemption as a country,” he said, noting that in other EU member states 90% of the population can be served by public transport, unlike in Cyprus.
Wider price impact expected later
Asked whether higher fuel costs had already led to a broader increase in prices, Drousiotis said they had not.
He said the effect of September’s fuel price increases on other products would become visible after around one and a half to two months.
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