Dutch motorists will be spared a major hike in petrol prices in January after the outgoing cabinet decided to extend the temporary fuel tax cut for another year, the Telegraaf has reported.

The measure was first introduced in April 2022 to offset soaring oil and petrol prices after Russia’s invasion of Ukraine, and has since been renewed annually. Without the extension, the price of petrol was set to rise by more than 25 cents per litre in the new year.

The move will cost the treasury around €1.6 billion. Finance minister Eelco Heinen has found a way to cover the bill, though government sources declined to say where the money will come from, the paper said.

The extension will run until the end of 2025. It will then be up to the next government to decide whether to maintain the reduced excise rate from 2026 onwards.

Motoring organisation ANWB and fuel station lobby group Drive Nederland urged the government this week not to allow the tax rise to go ahead, warning that otherwise the price gap with neighbouring countries would become too wide.

In some cases motorists already save up to 62 cents a litre by filling up across the border, the Telegraaf said.

The fuel tax decision is likely to be one of the few eye-catching measures in the upcoming budget, the Telegraaf said.

Outgoing prime minister Dick Schoof told MPs on Wednesday that the cabinet, already operating in caretaker mode and weakened further by the collapse of its coalition, would do no more than strictly necessary.

The fuel tax cut is expected to secure broad backing in parliament.