Gov’t forms operation rooms ahead of imminent fuel price hike

CAIRO - 4 July 2019: Ahead of imminent increase of fuel prices, 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 early Thursday.

In coming few hours, Ministry of Petroleum is expected to announce new prices of octane gasoline 95 in accordance with the automatic pricing mechanism that was approved in January. Also, the final subsidies cut on gasoline 92 and 80 will be declared.

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 LE11 or LE15 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).