The Spanish government will cut the value-added tax (VAT) on gas to 5% from 21% from October to reduce the impact of rising gas prices on utility bills, Prime Minister Pedro Sanchez said on Thursday, Reuters reported.

The measure would result in a loss of revenue of around 190 million euros per quarter, budget minister Maria Jesus Montero told reporters later on Thursday.

Over the past year, the government has reduced the value-added tax on electricity to 5% twice.

The cost of electricity has risen sharply due to the situation around Ukraine, since Russia is the main supplier of natural gas to Europe for heating and power generation.

Spain, together with its European Union partners, has committed to reducing its gas consumption by 7%, although so far this year, Spanish gas consumption has increased compared to last year.

The summer heat wave has caused a sharp increase in demand for electricity for cooling devices, and also reduced the production of hydroelectric power - a significant source of energy in Spain - due to water shortages.