Cyprus seeks to mitigate impact from new EU maritime fuel tax

Minister of Transport, Communications and Works Alexis Vafeades chaired a Transport Council meeting this week to discuss the impact from the implementation of the new EU maritime fuel tax.

The meeting was also attended by Deputy Minister of Shipping Marina Hadjimanolis and representatives of the Cyprus Chamber of Commerce and Industry, Employers and Industiralists Federation, Technical Chamber ETEK, Cyprus University of Technology, University of Cyprus, Department of Environment, Cyprus Chamber of Shipping, Cyprus Shipowners' Union and Cyprus Shipping Association.

Speaking to the press after the Council’s meeting, Vafeades said the competent authorities from the private and public sector were making an effort to agree on a common approach for Cyprus to present at the European level in order to mitigate the negative impact. This, he said, will be put forward in consultation with the other seven Mediterranean countries that are most affected by the new European taxation. He also spoke about the need to pursue compensatory measures.

"Essentially, we have discussed how the cost increases for consumers by this taxation and all this in view of the fact that at the beginning of April the EU Transport Council will take place, but also another meeting between the Ministers of Transport of the eight countries (Portugal, Spain, Italy, Greece, France, Malta, Croatia and Cyprus) which are essentially affected by this taxation especially due to the close proximity of their ports to other ports such as those of North African countries," Vafeadis noted, explaining that therefore the effort is to create a joint approach between the private sector and the state authorities so as to draw up the arguments with which Cyprus will argue in favour of improving this situation and reducing the cost for the consumers.

"The effort will continue, we will look at the issue in the EU and we will try in cooperation with the other countries that cooperate with us on this issue to bring a better result," he said.

The Minister of Transport explained that the issue is that the EU alone is promoting these new regulations and that the other countries are not keeping up with the pace at which the EU is trying to manage climate change. Which, as he explained, creates a difference in the cost of conducting each activity.

And he noted that therefore one of the issues that Cyprus should highlight is the cost of these new regulations for the citizens and that the EU should start discussing compensatory measures.

"Additionally, we will see how we as the EU can identify with the policies of other organizations such as the International Maritime Organization (IMO) which determines what is done globally."

Vafeades said there should be a discussion on how Europe relates to what happens in the rest of the world, how the EU priorities create an additional burden on EU citizens “and how we can help so that these costs are reduced to minimum".

Asked why only the southern countries are affected and not countries such as Germany and the Netherlands with large ports such as Hamburg and Rotterdam, Vafeades indicated that all countries are affected but those that are most affected are those in proximity to third country ports which do not apply these regulations. As he explained, the cost of ships moving to the Mediterranean region will be less if they approach North African ports instead of an EU member state port.

He explained that Cyprus is in an even more difficult position as geopolitical developments have pushed most ships to change routes avoiding the Suez Canal, which increases the distance and therefore the taxation.

When asked if the competitiveness of Cypriot ports is affected by the new regulations, the Minister explained that not only the competitiveness of Cypriot ports is affected but of all EU ports noting that this is exactly the argument. That is to say, the cost of those ships cooperating with European ports increases at the moment when the ports of third countries keep the prices lower and thus "their competitiveness is upgraded at the expense of our own ports".

When asked if this matter might affect Cypriot shipping in general, the Ship Registry and the Cypriot flag, Vafeades explained that the Registry is not expected to be affected as the cost increase concerns each route and has nothing to do with the ship's registration.