Egypt lifts fuel subsidies completely, announces new prices

CAIRO - 5 July 2019: Egypt announced applying the fifth and final tranche of fuel subsidies cut Friday morning.

The government announced the new prices of fuel gasoline 95 according to the automatic pricing mechanism that was approved in January at LE 9 per liter.

According to the statement, 92 octane gasoline price amounted to LE 8 instead of 6.75 per liter. Prices of gasoline 80's liter increased to LE 6.75 instead of LE 5.

The price of diesel will be LE 6.75 a liter instead of LE 5.5, while the price of the natural gas used for vehicles rose to LE 3.5 per cubic meter for cars instead of LE 2.75.

Meanwhile, government has announced raising the price of the cooking gas cylinder to LE 65 instead of LE 50 and the commercial gas cylinder's prices surged to LE 130 instead of LE 100.

The new pricing officially came into effect on July 5 at 9 AM, as per the government's decision.

Early Thursday, Egypt’s government instructed to open an operation room for undetailed “economic measures” in every governorate nationwide as per a statement issued by the Ministry of Local Development.

According to a report issued by the General Petroleum Corporation in June, production of gasoline and diesel costs the state up to LE 8.5 per liter during the current year and not LE 11 or LE 15 as rumored.

The cost of fuel production on the state is variable and not fixed as it relates to the global market prices.

According to earlier statement by the Ministry of Petroleum, the new increase will not exceed the maximum of about 20 percent, especially after the decline in global fuel prices and exchange rate of the Egyptian currency against the U.S. dollar scale.

Egypt's budget for current fiscal year 2019/2020 revealed the reduction of fuel subsidies to LE 52.96 billion, down from LE 89.07 billion in 2018/2019.

Egypt embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT), and cutting energy subsidies, with the aim of trimming the budget deficit.

Since 2014, the state committed to lift energy subsidies gradually over five years. It floated its legal tender in November 2016 before it clinched a $12 billion loan from the International Monetary Fund (IMF).

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1 Egyptian Pound equals 0.060 US dollar.