On Wednesday, in its quarterly review meeting, the Fuel Automatic Pricing Committee (FAPC) raised the price of diesel by 13.7 percent - from EGP 7.25 to EGP 8.25.

The petroleum ministry ascribed the FAPC decision to raise the price of diesel to the increase in petroleum products in global markets as well as the devaluations of the Egyptian pound between July 2022 and April 2023 due to the ramifications of the conflict between Ukraine and Russia.

The ministry explained the government will be subsidising diesel for consumers at EGP 4 per litre, given that the actual cost of diesel increased to EGP 12.25 per litre.

Under the IMF-backed recent $3 billion loan deal, Egypt is committed to fully implement the fuel price indexation mechanism.

The government committed in this regard to refrain from applying any formulaic decreases in fuel prices until fuel subsidies, for each product subject to the mechanism, have been eliminated in the FY 2021/2022. 

Based on the government data, the subsidies for diesel have reached EGP 222 million per day, or EGP 6.7 billion monthly, which adds up to an average annual cost of EGP 80 billion, before the application of the latest increase.

However, following the increase, the government subsidies would decline to EGP 178 million per day or EGP 5.3 billion per month, reaching an annual cost of EGP 64 billion.

The petroleum ministry noted that the price of diesel remained at EGP 6.75 per litre between July 2019 and July 2022, before undergoing an EGP 0.5 increase to remain at EGP 7.25 per litre between July 2022 and April 2023.