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Egyptian fuel smart cards to combat smuggling, not ration fuel: Officials

Smart card system which will launch in July and August to be initially used for smuggling prevention rather than rationing subsidised fuel as previously announced

Marwa Hussein, Sunday 23 Jun 2013
A man fills the tank of a car at a petrol station in downtown Cairo (Photo: Reuters)
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Egypt's smart card system for subsidised fuel will come into effect in July for diesel and in August for gasoline, Prime Minister Hisham Qandil said in a press conference on Saturday.

Initially there will be no limits imposed on the quantities consumers can use, said the prime minister, a change in policy compared with previous announcements regarding the scheme.

In March, then-planning minister Ashraf El-Araby announced that the smart cards would entitle owners of vehicles with smaller engines (1,600 cc or smaller) to an annual 1,800 litres of subsidised fuel, over which motorists will have to pay market prices.

But officials present at the press conference stressed that the aim of the new system is now to tackle smuggling of subsidised fuel, which they blame for fuel shortages.

"Although fuel quantities distributed to gas stations exceed consumption by 20 to 30 percent, there are still shortages,” said Tarek El-Barkatawi, head of the Egyptian General Petroleum Company 

Egypt, which has experienced fuel shortages in the past few years, was hit by particularly severe shortages this year.  

While the government blames fuel smugglers for the crisis, many gas stations say they do not receive the required quantities.

Prime Minister Qandil said that an island in the Mediterranean had sent a letter to the Egyptian government requesting it put a stop the smuggling of Egyptian fuel. He did not name the island in question.

Post offices, traffic points and branches of the Bank for Development and Agricultural Credit will be among the distribution points for smart cards.

Owners of diesel-powered vehicles, mainly taxis and microbuses, which according to government records number one million, will simply have to pick up their cards from designated distribution points.  

Owners of cars running on gasoline will have to enter a website to register.

According to the ministry of finance, vehicles without a traffic licence such as three-wheeled tuktuks and agricultural vehicles will be eligible for smart cards according to a new system to be introduced in September. Any fuel sold outside the smart card system will be sold at cost price, said El-Barkatawi.

Diesel is currently sold at the subsidised price of LE1.10 per litre, while 80 octane petrol costs LE0.90 per litre, 90 octane petrol LE1.75, and 92 octane petrol LE1.85.

The government says it has 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 distribution.

The government has announced many times its ambition to reduce fuel subsidies that consume around a fifth of budget expenditures.

The total bill for energy subsidies is expected to reach LE100 billion in 2013/14, compared to some LE120 billion expected this year.

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