The Egyptian General Petroleum Corporation (EGPC) announced it was raising petrol prices, with the price of lowest-value Octane 80 fuel rising 78 percent and the cost of diesel rising 64 percent.
The price hikes, which took ffect as of midnight Friday, follow a cabinet approval earlier this week.
Egypt’s recently elected president Abdel Fattah El-Sisi has ratified the state budget for the forthcoming fiscal year which took effect as of July.
The new budget managed to trim the deficit by LE48 billion, now registering LE240 billion or 10 percent of Gross Domestic Product (GDP); featuring a LE44 billion cut in the energy subsidy bill.
In the last two months, official sources have been quoted as saying that the costs of three widely-used forms of petrol – 92 octane, 80 octane and diesel – will be raised by LE0.50 to LE1 per litre.
Such reports, which Hany Kadry Demian, the minister of finance, dubbed as "irresponsible," at a press conference earlier this week, have created a nationwide state of panic among a population accustomed to heavily-subsidised fuels for decades.
But the EGPC announcement shows Octane 80 will increase by LE0.7 to LE1.6 per litre, Octane 92 will rise by LE0.75 to LE2.6 per litre and Diesel will climb some LE0.7 to LE1.8 per litre.
At the moment, petroleum stations are crowded with queues of motorists trying to full their tanks for the last time with the old prices.
El-Sisi had refused to ratify a draft budget presented last week by his cabinet which featured a 12 percent deficit on the grounds that would result in overly elevated levels of domestic debt.
The ministry of finance monthly report preminilary figures shows that Egypt’s domestic debt stood at LE1.6 trillion ($223.8 billion) in March 2014.
The new budget targets a budget deficit of LE240 billion or 10-10.5 percent of GDP, with revenues totalling LE549 billion and total expenditure at LE789 billion.
The fuel subsidy bill amounted to LE144 billion in the initial draft budget but was reduced to LE104 billion, before finally reaching LE100 billion, Kadry told reporters in the conference.
Electricity prices saw their share of hikes as Egypt's electricity minister Mohamed Shaker held a press conference on Thursday to announce the new tariffs for both households and commercial sectors, representing a new increase in energy prices.
According to Shaker, the new tariffs, which started this July, aim to trim the state's subsidies for the electricity sector by 67 percent over five years to reach LE9 billion – instead of the LE27.4 billion already allocated in the fiscal year 2014/15.
Electricity tariffs didn't change for more than a decade until 2004, when the government announced a plan to raise prices – later halted in 2008 as a result of the international economic crisis.
The new rise per kilowatt/hour (kw/h) will vary from LE0.02 to LE0.07 increasingly.
According to official figures, electricity recorded more than 55 percent consumption of the country's total natural gas production.
In June, the petroleum ministry's spokesman told Ahram Online that it provides power stations nationwide with around 80 million cubic metres of natural gas, 26,000 tonnes of the low-quality fuel mazut and 1,500 tonnes of diesel per day in an attempt to avoid ongoing regular blackouts.
In late 2012, the government liberalised the price of the highest quality gas, octane 95, which is currently sold at LE6.25 a litre.
It also raised prices for cement companies that use Mazut for production by 130 percent to reach LE2,300 ( $328) per tonne, compared to the previous price of LE1000 ($143) per tonne.
In April, it was announced that the government had issued two million fuel smart cards to be ready for use in petrol stations nationwide.
Reuters reported that the government aims for a total of 4.5 million cards to be issued over the programme’s second phase, which began last July.
Egyptian authorities have already implemented the first phase of the smart card system, which consisted of issuing cards for tanker trucks and gas stations and building a database of companies and depots for fuel distribution.
The smart card system aims to curb the smuggling of subsidised fuel and thus help to rationalise state subsidies for petroleum products.