Electricity Tariff Increase Raises Concerns Among Businesses

Businesses in northern Cyprus are warning of mounting cost pressures after the electricity authority announced a 22% increase in power tariffs, set to take effect in June. The decision has sparked concern across the industrial sector, where rising energy costs are already weighing on competitiveness and operating margins.

Cost Pressures And The Need For Adjustment

According to the electricity authority, energy costs have increased significantly over the past 14 months without corresponding tariff adjustments. Officials said a smaller increase of between 10% and 15% had previously been proposed but was not approved by the council of ministers. Since then, fuel prices have risen by more than 60%, while the cost of living has increased by 38% and exchange rates by 18%. The authority argues that the latest tariff adjustment is necessary to maintain the financial sustainability of the electricity system.

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Industrial Impact And The Risk Of Losing Competitiveness

KTSO President Ali Kamatzoglou said electricity remains one of the largest cost components for local manufacturers and producers. According to Kamatzoglou, industrial electricity prices currently stand at around 10 Turkish lira per kilowatt-hour, compared with approximately 3 Turkish lira in Turkey, placing businesses in northern Cyprus at a competitive disadvantage. He warned that an increase to 12.5 Turkish lira per kilowatt-hour could further weaken the sector’s competitiveness and put additional pressure on industrial activity.

Sector-Specific Concerns And Calls For Government Intervention

Concerns extend beyond manufacturing to sectors including food production, construction, cleaning products and water supply. Industry representatives estimate that around 25 producers and approximately 1,500 employees could be affected by higher electricity costs. Kamatzoglou called on the government to introduce support measures and develop a longer-term strategy to help businesses manage rising operating expenses while maintaining competitiveness.

Economic Implications

Business groups are now awaiting a response from policymakers as concerns grow over the broader economic impact of the tariff increase. Industry representatives argue that without targeted support, higher energy costs could affect production levels, investment decisions and employment across multiple sectors.