The prices of butane gas cylinders were raised last week as part of efforts to rationalise Egypt’s system of fuel subsidies.

The percentage of the increase varies according to the size of the cylinder, with the price of a 12.5 kg cylinder, usually used in households for cooking, raised by 50 per cent to LE150. A 25 kg cylinder, mainly used in bakeries, restaurants, and coffee shops, has been raised by 33 per cent to LE200.

Egypt consumes 380 million butane gas cylinders a year, Prime Minister Mustafa Madbouli said at his weekly press conference last week. He said the actual cost of each gas cylinder is LE340. Some LE60 billion of the government budget goes towards subsidising butane gas cylinders, he indicated.

Almost 40 per cent of Egyptian households depend on butane gas cylinders for cooking, as well as most restaurants, which usually buy the larger canisters.

The effects of the price rises resonated last week. “A piece of falafel cost LE0.5 more and now sells for LE1.5 only a day after the decision was announced,” said Nevine Samir, a Heliopolis resident.  

Observers believe the move will push up the price of bread and maybe also poultry because chicken farms use cylinders for heating, especially in the winter months.

Together with the 40 per cent increase in electricity prices, the move is expected to push the inflation rate upwards in September. This reversed its five-month downward trend in August on the back of the increase in fuel prices.

The last few months have witnessed increases in the prices of octane gas, gasoline, and diesel in addition to subsidised bread and electricity.

The government’s Fuel Pricing Committee is to convene by the end of the month to decide on fuel prices for the rest of the year. It is expected that the government will maintain prices as they are as international oil prices are falling.

Fuel prices have been raised by the Ministry of Petroleum and Mineral Resources twice this year, hiking petrol prices by eight to 10 per cent and diesel prices by 21.1 per cent in March and then again in July, when they were raised by up to 15 per cent.

Madbouli noted that there will be no more power cuts as there were this summer as the government is working to secure gas shipments to cover the increased demand for energy.

According to Reuters, both Saudi Arabia and Libya have financed the purchase of gas cargoes worth at least $200 million to help Egypt fill the gap between demand and supply until the end of October.

Madbouli told reporters that gas output will return to normal levels before June 2025, attributing the earlier decline in Egypt’s production to the government’s inability to pay foreign companies developing local gas field their dues.

* A version of this article appears in print in the 26 September, 2024 edition of Al-Ahram Weekly