Newsroom
Vulnerable households in Cyprus are set to receive €174 million in financial support between 2027 and 2032 as the government prepares for new European energy rules that are expected to increase fuel costs.
The support package, combining €131 million in European funding with €43 million from national resources, is intended to help people experiencing energy and transport poverty adapt to the changes.
A representative of the Ministry of Finance told the House Energy Committee on Tuesday that EU member states have the option of launching their support programmes a year before the new system takes effect.
Grant schemes in Cyprus are therefore expected to begin in 2027, while the new European framework is scheduled to come into force in 2028.
The early introduction of support is intended to make the transition easier for vulnerable groups, particularly households struggling with the cost of energy and transportation.
The measures are linked to legislation being examined by parliament to bring Cyprus into line with European rules promoting renewable energy in transport and sustainable fuels in aviation.
Under the proposed framework, Cyprus has chosen to pursue a reduction in greenhouse gas emissions from transport rather than meet an alternative target for renewable energy use.
While the standard target for other EU member states is a 14.5% reduction in greenhouse gas emissions, Cyprus plans to set its target at 11.5%, taking advantage of an exemption available to countries with limited domestic biofuel production.
A Ministry of Energy representative explained that Cyprus does not currently produce sufficient quantities of biofuels domestically to meet the higher target.
Achieving the 11.5% reduction would require an increase in the proportion of biofuels blended into diesel, from the current 7.5% to 17.5%, according to estimates presented to the committee. Biofuels would also be added to petrol.
Officials estimate that these changes could eventually add around 7 cents per litre to the price of diesel and approximately 2.5 cents per litre to petrol.
The planned €174 million support programme is therefore intended to protect vulnerable sections of the population from the financial effects of the transition.
Kyriakos Iordanou, Director-General of the Ministry of Energy, told MPs that harmonisation with European legislation would unfortunately involve additional fuel costs but said the bill was based on EU requirements.
The Ministry of Finance representative said approximately two more months would be needed before the legislation is submitted to the European Union for examination, with the review process expected to take around four months.
The support measures received significant attention during the committee meeting, with politicians calling for greater clarity over how consumers will be protected.
Committee chairman and DISY MP Nikos Georgiou said all relevant authorities had accepted that the legislation would increase costs for conventional vehicle owners and could also affect the cost of air travel.
However, he argued that general assurances about future support were not sufficient.
Officials from the relevant ministries told the committee that compensatory measures are included in the National Energy and Climate Plan, which is currently being revised.
Georgiou said the government must provide clear details about the measures, including who will receive assistance, how the support will be delivered and when it will become available.
He said the green transition is a necessary European objective but should not result in a continuous financial burden on citizens.
The €174 million package should therefore form part of a comprehensive policy designed to protect consumers from the cumulative effects of rising energy and transport costs, he said.
AKEL MP Andreas Pasiourtides also called for additional action to reduce the financial pressure on consumers.
He said the cost of complying with the new EU requirements would ultimately be borne by Cypriot consumers and taxpayers unless effective measures were introduced.
Pasiourtides renewed AKEL's call for the abolition of what the party describes as double taxation on fuel. He said that a significant proportion of the price paid for fuel consists of taxes and argued that removing VAT from the excise duty could reduce fuel prices by approximately 7 to 8 cents per litre.
A representative of the Cyprus Scientific and Technical Chamber, ETEK, meanwhile, said more support was needed for domestic biofuel producers.
Despite private-sector efforts to increase local production, the representative said potential producers had received insufficient assistance from both the state and financial institutions.
MPs are now awaiting the government's formal position and further details on the support measures before beginning an article-by-article examination of the proposed legislation.
