AKEL proposes measures to cut energy cost

Three measures to reduce electricity costs and three measures of structural nature are proposed to the government by AKEL.

Specifically, at a press conference, AKEL’s General Secretary, Stefanos Stefanou, proposed the following:

1. Reduction of the VAT rate on electricity from 19% to 9%. This was voted by the Parliament following an AKEL bill proposal, but the law was deemed unconstitutional by the Supreme Court after a referral by N. Anastasiades. We call on the Christodoulides government to bring a relevant bill to Parliament. We urge them to address the EU and request the reduction of the rate. There is strong argumentation to support the government’s request; it just needs the political will to act, instead of hiding behind excuses. The state has increased revenues from VAT as a result of increased bills and can absorb the fiscal loss. VAT reduction can continue until the structural change of energy costs.

(Documentation: high rate of energy poverty, lack of alternative solutions to ensure access to energy, state’s neglect in creating infrastructure leading to increased electricity costs).

2. Taxation of windfall profits in the energy sector and allocation of revenues to targeted policies to address energy poverty. Since November 2022, we have submitted a relevant bill proposal to Parliament, but unfortunately, we have encountered obstruction from the previous government and silence from the current government. AKEL’s proposal is not only a demand of society but is now also a position of the competent regulatory authority, RAEK.
3. We support the continuation of existing measures for energy and fuel. Estimates of new price increases in energy make the continuation of measures imperative.

Structural Measures

1. Utilization by the state of revenues from pollution for addressing energy poverty, promoting RES installation, and infrastructure creation (installation of storage systems, network improvement, and reinforcement). This is an EU directive adopted in national legislation. (The millions are significant: only in the period 2021-2022, revenues amounted to €180 million. There is insufficient information on how these revenues are managed, as there is a suspicious lack of transparency on the part of the authorities).
2. Support by the state to EAC to develop its infrastructure and modernize its units (we are talking about those in Dekelia) aiming for the immediate transition to electricity production with natural gas and RES. EAC is the country’s cornerstone in the energy sector, ensuring energy security and sufficiency. In the recent past, EAC was not allowed or obstructed by the previous government to proceed with necessary investments. The Government of the Alarm tried to undermine the sustainability and role of EAC with various decisions and actions. Unfortunately, there were mistakes and shortcomings even by the EAC Board of Directors appointed by the previous government. We hope the new Board of Directors will meet the challenges facing EAC. The stance and policy of the Christodoulides government towards EAC are crucial. For us, it is non-negotiable that EAC must be supported to fulfill its role as the backbone in energy developments. On this issue, we call on the President of the Republic to clarify his government’s position.
3. The government must finally proceed with competitive tenders for the integration of RES into the energy mix. We emphasize that in other countries, such tenders have led to electricity production at a very low cost per kilowatt-hour. Unfortunately, the previous government also showed unacceptable procrastination on this issue, despite publicly committing to conducting competitive tenders by October 2022.