WITH fuel prices rising across the island, opposition parties, unions, and consumer organisations are demanding that the government intervene to provide economic relief for its citizens and increase inspections to prevent local petrol companies from profiteering off the high prices.
EDEK deputy George Varnava said in a written statement yesterday that it is “especially worrying that these [oil price] increases are affecting the middle and lower classes”, and proposed that the government reduce the fuel consumption tax, subsidise electricity, and strengthen the Consumer Protection Agency.
Varnava also noted that while fuel prices have increased 25 per cent since the start of 2005, the VAT (value added tax) returns from fuel have also increased unjustifiably by 25 per cent, adding that the government should return this unwarranted tax revenue to the middle and lower classes.
Among the long-term measures, Varnava asked that the government create a public transport system and increase funding and efforts towards developing alternative energy resources like solar and wind-powered sources.
“Cyprus is in first place among EU member states in the amount of heating fuel it imports,” Varnavas said. “There needs to be an increase in importing other means of creating energy (solar panels, wind-parks).”
In a statement yesterday, the Employers’ and Industrialists’ Federation (OEV) said that the dramatic increase in oil prices had caused serious problems for those companies who had been contracted for a fixed fee before the fuel increases. OEV noted that some companies have had to sell their services below cost so that they do not lose their clientele.
“The government needs to take immediate support measures for these enterprises like the setting of prices for fuel, since fuel is consumed [in these enterprises] at the same level as in agriculture.”
Meanwhile, the trade union PEO is asking the government to increase inspection over how petrol stations set their petrol prices so as to minimise profiteering. The company also noted that the inspection should not be limited only to petrol companies, since crude oil price increases have led to exaggerated price increases in all goods.
The Cyprus Consumers’ Union and Quality of Life also issued a statement in which it criticised the government for a lack of oversight over local petrol companies, which it views are taking advantage of the increase in crude oil prices and inflating their prices.
“The Cyprus Consumers’ Union and Quality of Life believe that the practice of ‘free competition’ has developed into one of ‘free price-raising’ with the goal of regulating prices in the market always so that the burden falls on the consumer.”
Consumers’ Association President Petros Markou told the Cyprus Mail yesterday that there was little that could be done to affect international oil prices, but local petrol companies could affect domestic prices.
“The petroleum companies could fix prices at a level higher than is justified [by international crude oil prices]”, Markou said. “Another thing that can happen, at least theoretically, is that all the companies could agree to impose an increase of the same amount, say by four or five cents. In such a case the Minister and the Competition Protection authorities should intervene immediately because the free market conditions have not been met.”
Markou noted that the Consumers’ Association monitors the ad hoc committee, which is made up of representatives from the Finance Ministry and the Ministry of Trade and Industry, that “advises the Minister on whether free market conditions are met and whether the fuel increases are within logical limits.”
Unleaded 98 Octane Petrol is now selling at 59 cents per litre, 95 Octane at 57.1 cents per litre and the diesel 53.8 cents per litre. These figures indicate a 30 per cent price increase since the beginning of the year for 95 Octane, a 26.6 per cent increase for 98 Octane, and 28 per cent increase for diesel.
Opposition DISY deputy Lefteris Christoforou charged the government for delaying to establish any relief measures for the citizens. “Unfortunately the government is only playing the role of a spectator as the prices rise and a fuel tax collector.”
Last week, the Commerce Ministry announced it had put together a package to provide relief, which will initially focus on lower income groups. Before the measures can be passed, the Trade Minister has to present the plan to the newly appointed Finance Minister and then the Council of Ministers must approve the package.
