Egypt to start rationing petrol subsidies in May

Ahram Online, Tuesday 5 Mar 2013

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

Petrol
Egypt to issue a smart card to disburse subsidised petrol (Photo: Bassam Al-Zoghby)

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%

 

 

Short link: