Cost of natural gas for industry in Greece is EU’s third highest

The cost of natural gas for industrial use in Greece ranks as the EU’s third highest, according to Eurostat data, as a result of the considerable amount of taxes imposed on the energy source.

Even so, the Greek government appears to be preparing to increase taxes on natural gas. Eurostat data showed that the price of natural gas for industrial use in Greece was 3.79 euros per KWh during the first half of 2015, higher than levels registered by EU economic powerhouses such as Austria, Germany, Denmark, the Netherlands, France, and the UK.

Finland and Sweden, ranked first and second respectively, are the only two EU member states whose natural gas costs for industry exceed those of Greece’s.

At present, Greece imposes the highest level of special consumption tax on natural gas for industrial use in the EU. This tax level in Greece is more than double the rate suggested by an EU directive. As a result, the cost of natural gas imported increases by at least 40 percent as a result of this tax alone. About 65 percent of gas imported into Greece is used for electricity production. Worse still, the special consumption tax is not recoverable, as it cannot be offset against sales and exports, as is the case with value added tax.

Industrialists have every reason to believe they are being fooled by the government’s repeated announcements of prospective energy cost cuts for the sector. These promises not only remain unfulfilled but seem to be headed in the opposite direction, as highlighted by the latest thoughts to increase the special consumption tax imposed in natural gas for local industry.

The Greek government expects its plan to increase fuel taxes will raise an additional 200 million euros in tax revenues. Based on early indications, the fuel tax hikes will be widespread as a means of spreading out the resulting cost burden, and will cover liquid fuels, diesel, LNG for vehicles, as well as natural gas for household and industrial use. Initially, the government was considering a single tax hike for liquid fuels, which would have increased the special consumption tax for this category by 10 cents per liter.