**Diesel Prices Reach Historic High in Cyprus, Calls for VAT Reduction Intensify**
On Friday, diesel prices in Cyprus reached an unprecedented average of €1.997 per litre, surpassing the previous record of €1.989 set in July 2022. This significant increase has prompted fuel industry representatives and consumer advocacy groups to renew their calls for a reduction in value-added tax (VAT) on fuel.
According to data from the Consumer Protection Service, diesel prices across the island varied between €1.879 and €2.098 per litre, with over 100 petrol stations already charging above the €2 mark. Marios Drousiotis, president of the Consumers Association, indicated that the average price was expected to exceed €2 per litre by Saturday, reflecting a broader trend of rising fuel costs.
In addition to diesel, heating oil prices have also reached record levels, with current prices ranging from €1.489 to €1.735 per litre, averaging at €1.608. This figure exceeds the previous high of €1.515 recorded in July 2022. Meanwhile, the average price for unleaded 95 petrol stands at €1.718, which remains below its peak of €1.828 from 2022.
Drousiotis explained that the implementation of price increases at petrol stations is not instantaneous; rather, it typically takes two to three days for the full impact of a price hike to be reflected across the network. Savvas Prokopiou, president of the Petrol Station Owners Association, noted that stations that have yet to raise their prices are likely to do so on Monday, following the weekend.
Both Drousiotis and Prokopiou have urged the government to consider reducing the VAT on fuel, which currently stands at 19 percent. Drousiotis highlighted that the government is collecting additional VAT revenues as a result of the price increases, specifically 7.5 cents per litre on petrol, 11 cents on diesel, and 12.34 cents on heating oil. He argued that these additional revenues should be returned to consumers, particularly as discussions about a potential heating oil subsidy are underway.
Drousiotis pointed out that the government has the option to reduce VAT on fuel to 5 percent, similar to the reduction already implemented for electricity, without needing approval from the European Commission. He also suggested that Cyprus could follow the examples set by Spain and Sweden in seeking EU approval for a further reduction in fuel consumption tax.
Prokopiou emphasized that the rise in fuel prices is not isolated to Cyprus but is a growing concern across Europe. He proposed that Cyprus could take a lead role in advocating for a Europe-wide VAT reduction on fuel, particularly given the lack of viable public transport alternatives in the country. He noted that this absence of public transport means that fuel demand in Cyprus does not decrease in response to rising prices, unlike in other EU member states where a significant portion of the population relies on public transport.
When asked if the recent fuel price increases had yet impacted the broader cost of goods, Drousiotis stated that no widespread price hikes had been observed so far. However, he anticipated that the effects of the price increases seen in September would likely manifest in other products within the next two months.
As the situation develops, Finance Minister Makis Keravnos is expected to present proposals to the cabinet at the end of the month aimed at addressing the rising cost of fuel. However, he has indicated that no final decisions have been made at this stage.
The surge in diesel and heating oil prices continues to be a pressing issue for consumers and industry stakeholders in Cyprus, with calls for government intervention growing louder as the economic impact of these increases becomes more pronounced.