By Stelios Orphanides
A year after the legalisation of the use of liquid petroleum gas (LPG) by cars, the Ministry of Energy, Commerce, Industry and Tourism appears to lack a policy of actively encouraging both supply and demand.
After private sector companies invested money in training mechanics to carry out conversions on cars to allow the dual use of LPG and petrol, consumers, who frequently complain about high fuel prices, will have to wait for quite some time until the civil service gets its act together before the private sector invests more money in an import and distribution network.
“There is currently no petrol station that received all required permits to sell LPG,” the permanent secretary of the energy ministry Stelios Himonas said in response to a questionnaire of the Cyprus Business Mail. “There have been 28 applications for a permit to place LPG pumps and seven permits have been issued, which went to the stage of applying for a building permit. A petrol station which has a LPG pump has been constructed and a second one is under construction”.
Still, the petrol station which has an LPG pump has no operation licence, as required by the Customs Department, he said.
And even if it had such a licence, the petrol station’s operator would find no auto-LPG anywhere on the market as the Customs Department is still considering an application filed by a private company to import auto-LPG, while a second company is expected to apply for an import licence, Himonas said.
Stakeholders complain not only for the absence of a government policy to promote this type of fuel, which is cheaper and environmentally friendlier compared with petrol, but also for stricter safety requirements which increase the installation cost for LPG pumps and discourage private investment.
“The most important incentive adopted with respect to auto-LPG is the considerably lower taxation compared to other (types of) fuel,” Himonas continued.
Auto-LPG is taxed with €0.07 per litre plus 19 per cent value added tax compared to €0.45 per litre on petrol and diesel, he said and ruled out a reduction of the excise tax on LPG, citing European Union rules. The value-added tax rate on heating LPG is 5 per cent.
EU law allows member states to exempt heating LPG and Cyprus, which already has the infrastructure to import and distribute heating LPG for years now, takes advantage of the exemption.
The Cyprus Business Mail understands that because of the difference in taxing heating LPG and auto-LPG, importers will have to put separate import, storage and distribution infrastructure in place, further driving cost up.
“The ministry does not believe that there is procrastination in supplying the market with auto-LPG because there is no licenced infrastructure” to import, store and distribute, Himonas said. “On the contrary, the 28 applications submitted for a permit to place an LPG pump at existing petrol stations and the two to three pumps that have been installed or are being installed, shows the eagerness of market players to promote auto-LPG”.
About one in ten petrol stations island-wide intend to install a LPG-pump, he said.