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Egypt to start rationing petrol subsidies in May

Smaller cars will be given an allowance of subsidised petrol, while larger cars will not be eligible

Ahram Online, Tuesday 5 Mar 2013
Petrol
Egypt to issue a smart card to disburse subsidised petrol (Photo: Bassam Al-Zoghby)
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Egypt will start implementing the ‘smart card’ system to sell subsidised petrol on government vehicles in May 2013 and on private cars in July, Planning Minister Ashraf El-Araby said Monday.

Under the new system, vehicles with smaller engines (1,600cc or smaller) will be assigned an annual 1,800 litres at the subsidised price. If consumption exceeds this amount, motorists will have to buy petrol at market prices, El-Araby was quoted as saying by state owned news agency MENA.

Cars with larger engine sizes will not be eligible for any subsidies. The final market prices for petrol have not been announced yet; nor has the price at which petrol will be sold to commercial vehicles.

Egypt aims to slash its extensive subsidy bill in a quest to curb its budget deficit, expected to edge above LE200 billion ($30 billion) in the current fiscal year. Fuel subsidies make up approximately half of the total subsidies allocated in the budget.

The amount spent on fuel subsidies is planned to reach LE70 billion in 2012/13, down from LE95 billion in the previous year. Such cuts, however, are seen as highly ambitious and hard to achieve.

Petrol makes up some 20 percent of this amount, most of which goes to subsidise low-grade octane 80 petrol.

The Egyptian government has already raised the prices of fuel on industrial companies that use mazut, a low quality fuel oil used for production, by 130 per cent.

Below is a table detailing the structure of fuel subsidies as presented in the state budget for 2012/13.

Product

Consumption

Total Amount Spent By Govt

Sales Revenues

LE Million

Subsidy

LE million

% of cost subsidised

Weight to total

Natural Gas

52.9 billion m3

32,277

29,718

2,559

8%

4%

Butane Gas

360 million Cylinders

21,960

6,080

15,880

72%

23%

Petrol

 7.7 billion litres 

31,620

17,878

13,742

43%

20%

Diesel Fuel

16 billion litres

62,165

26,436

35,729

57%

51%

Kerosene

 190 million litres 

5,225

3,135

2,090

40%

3%

Fuel Oil (mazut)

 9.2 million tons 

21,620

21,620

0

0%

0%

Total

174,867

104,867

70,000

40%

100%

 

 

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jane
28-03-2013 07:59am
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its fair
although the country is in a financial mess - this new system of only certain amounts of subsidised fuel is better for egypt. the government spends loads and far too much subsidising fuel when to be honest it itself has no money. it is one way of trying to sort the mess. no other countries have subsidised fuel to this amount and this has contributed to damaging the economy for years. I love sadat but even he relented when considering stopping the subsidieis due to revolutions - but it has to happen - here and all over the world.
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Farid
06-03-2013 09:18am
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From Experience
Those "smart cards" were implemented in Socialistic and Communistic countries in 70's. At the end IT DOES NOT WORK !!! It create more chaos, LEARN FROM THE PAST HOW TO MAKE FUTURE.
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Nora
06-03-2013 06:36am
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Great idea
The police has been able to pinned down several smuggling and theft of energy products. Having a smart card, even with some initial errors, will ultimately improve the distribution to the needy segment.
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Roslyn
06-03-2013 02:16am
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Smaller cars will be in vogue!
I am also skeptical, seems a bit sophisticated for this regime, and drivers too, will it be a plastic card, can you imagine, how many people will loose them, leave them at home, when they need to fill up, how will it be implemented, it seems as though many things could go wrong, even with the practical application itself, my mind is starting to boggle - imagine the first day, and how about the queue the day before! Tend to think many drivers might be in the market for a 'smaller' car! On reflection, the policy may change by May or be delayed! Phew!
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anon
05-03-2013 10:50pm
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skeptical about fair rationing
Since the government cannot get it right when it comes to having a vote in the elections (they expect many to go vote in their birth city), can they be trusted to treat citizens fairly. We here nothing of how these smart cards are to be deployed. Who can have one? Will they apply to the person where ever they are? Who controls the system and how? How much is it going to cost to set up and monitor? In a country full of corruption, where there isn't even a system for monitoring its own criminals records it seems amazing that we should believe in this system.
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jane
28-03-2013 08:03am
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but....
egypt has to start somewhere. eng;nad was messy many years ago but people started to put systems in place and althouygh they dont all work well, many have. you have to start somewhere as everythign is a mess here.
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Dr.Feelgood
05-03-2013 10:20pm
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Cheap trick
"Smartcard-System" means nothing else than fuel rationing. Don't be fooled!
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jane
28-03-2013 08:02am
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of course
yes it is - and is has to be. it is rationing of the horrifically subsidesed petrol that the government pay for and this is unlike any other country. your money is being used on peoplke's petrol rather than hospitals and food and schools. Once the subsidised petrol is used then people can buy more at tyhe normal market rate - this is a step in the right direction for egypt.
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