Factsheet for measure
CY-2022-22/2821
–
Updated
– measures in Cyprus
Electricity support package for citizens and businesses
Πακέτο μέτρων για την ηλεκτρική ενέργεια
Background information
The aim of the package is to support household consumers, vulnerable groups of consumers and businesses cope with the increased price of electricity as a consequence of the increasing price of energy raw materials and the war in Ukraine. The package is included among the measures taken by the Cabinet on 27 May 2022 to confront inflation and the increasing of prices of essential goods.
Content of measure
The supporting energy package consist of the following measures:
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Extension of the Decree, which was first issued in December 2021, that provides for the reduction of the VAT rate for electricity from 19% to 9% for all household consumers and to 5% to the vulnerable groups of consumers.
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Increase of the allowance for the Beneficiaries of Photovoltaic Systems and Thermal Roof Insulation. For vulnerable consumers the allowance will be raised from €750 to €1,000 and for household consumers it will be raised from €250 to €375.
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Extension of the list of the vulnerable consumers of energy by adding an extra number of 19,500 household units receiving an annual gross income up to €19,500.
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Increase the coverage of annual electricity produced from photovoltaic systems from 90% to 100% for use by household and business consumers. In this way, household and business consumers will be able to cover all of their energy needs through the photovoltaic systems
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Speeding up and simplifying the procedures for the installation of licensed ‘Renewable Energy Source’ systems for buildings that already received their planning permits.
Updates
The following updates to this measure have been made after it came into effect.
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22 February 2023
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The Cabinet decided to extent the decree that provides for the reduction of the VAT rate for electricity from 19% to 9% for all household consumers and to 5% to the vulnerable groups of consumers for another two months covering the electricity bill period March - April 2023. The estimated cost of the extension is €30 million covering 449,000 households and 111,500 businesses.
For the period 1 September 2022 and 31 January 2023, the state subsidy was €58.4 million covering 1,353,088 electricity accounts.
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Use of measure
At the time of start there was no estimation of the number of people/consumers and companies that are benefited by the measures of the electricity support package.
According to the announcement of the Ministry of Finance on October 2022, the Electricity Authority of Cyprus have started the implementation of electricity subsidy on electricity accounts for September 2022, which amounts to €15.2 on 286,911 accounts. In particular, 232,165 households have been subsidised, of which 9,224 refer to vulnerable electricity consumers, 44,441 commercial consumers and 8,597 industrial consumers.
Target groups
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Workers
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Businesses
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Citizens
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Does not apply to workers
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Applies to all businesses
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Applies to all citizens
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Actors and funding
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Actors
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Funding
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National government
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European Funds
National funds
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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No involvement
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No involvement
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Form
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Not applicable
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Not applicable
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Social partners' role in the
implementation, monitoring and assessment phase:
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No involvement
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Main level of involvement: N/A
Involvement
The designing of the measures of the package has been performed among the members of the Cabinet and no social partner or political party has been invited to participate in any kind of consultation. Similarly, social partners and political parties have no involvement in the implementation of neither measure of the package.
Views and reactions
On 22 June 2022, the Movement for Social Democracy (EDEK) said that citizens pay the cost for the inaction and the wrong decisions of the government and the purchase of greenhouse pollutants, which are distributed in the electricity bills of the citizens with a levied VAT. EDEK suggests ceilings in electricity prices and the reduction of the VAT rate to 5% and only on the consumption part of electricity bills. Additionally, the Reference of the bill by the President provoked the reaction of the major opposition party. The General Secretary of the ‘Progressive Party of Working People’ (AKEL) on 1 August 2022 said that the ‘referral of the President is a challenge for the society and workers. He also said that the President and the ruling party easily pass bills for the support of the large businesses and economic interests and refuse to demand measures from the EU for the support of the workers and SMEs. Similarly, the Democratic Party (1 August 2022) said that the decision of the President ‘deprives citizens of the immediate relief they would have had from the unbearable cost of electricity. Unfortunately, the government does not seem to understand either the magnitude of the problems faced by citizens or society's need for immediate relief measures’.
Sources
