Looking for ways to cushion impact of fuel prices

PROSPECTS for motorists remain bleak, with government official helpless in the face of the increasing international oil prices.

Finance Minister Makis Keravnos said yesterday the government, as well as the European Union, was bracing itself for the inevitable increase in fuel prices.

Speaking on state radio, Keravnos added that fuel prices would be discussed at a meeting of EU Ministers in the next few days.

“The consequences of these fuel prices increases will undoubtedly unsettle not just the Cyprus government but also other governments of states belonging to the European Union. The government is on alert and is ready to tackle the problem, which I must add has yet to reach a critical stage. However, we, as well as the European Union, are constantly looking into ways to cushion the impact.”

Keravnos played down speculation that the increasing fuel prices were making the government grow fat on the profits.

“The matter of increased fuel prices is not directly connected to consumption tax. We are talking about a couple of cents extra. Those implying that the high fuel prices are flooding more tax money into state funds are wrong.”

Government Spokesman Kypros Chrysostomides said yesterday the government was powerless to do anything about the problem.

“As things stand now, there is no way to take measures to alter the problem. Cyprus is not an oil producing country and the government has no other way to reduce fuel prices that are being determined by international fuel markets.”

Meanwhile, government and semi-governmental organisations are already feeling the backlash of the increased fuel prices, the spokesman for the Cyprus Electricity Authority (EAC), Costas Gavrielides, said yesterday.

“The EAC is making adjustments to its prices in response to the increasing crude oil prices. After negotiating with international companies we bought crude oil for £90 per metric ton and if the price, for example, goes up by about £30, or 33 per cent, then the increase in kilowatt will be about one cent. Right now, consumers are paying about 5.5 cents per kilowatt.”

He added that despite the increases, the situation was not as critical as it was in early 2004 when the prices per kilowatts were much higher. He didn’t dismiss the chance of electricity prices going up but did not want to say by how much.

For financially stricken Cyprus Airways, the price of fuel is one more woe, with current prices expected to bring their annual fuel costs to £5 million. The airline’s Financial Director Eleni Kalogirou said that if the fuel prices continued to increase then so would the fuel costs of the airline.

The Finance Minister would yesterday neither confirm nor deny recent speculation that the government was pondering the idea of opening up a state-run petrol company, along with the EAC and Investment company Demetra.

“I don’t have any specific details regarding that matter, but what I do know is that the government is looking into various ideas concerned with securing fuel and reserving fuel. These are just some of the matters that I will discuss with the Minister of Commerce and Industry very soon.”

The EAC had no comment on the matter.