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Egypt raises the price of subsidised gas cylinders

Subsidised butane cylinders will only be available to citizens holding the 'supply cards', and will be sold at LE8 instead of LE5

Ahram Onine, Thursday 6 Dec 2012
Egypt raises the price of subsidised gas cylinders
File photo: A man carries an empty gas cylinder on his back after the ones distributed by the army ran out in Cairo. Butane gas cylinders have seen a surge in prices over the past weeks as a black market flourished due to the lack of security, according to local media. (Photo: Reuters)

The Egyptian government has raised the price of subsidised butane cylinders to over double their price, starting 15 December, limiting the scope of those benefiting from the subsidy. The decision was announced in the official gazette on 2 December, but has received very low media coverage.

The official price of a subsidised 12.5 kg cylinder rose from LE2.75 ($0.45) to LE8 ($1.3). Unlike the previous system, subsidised cylinders will be available only to citizens who have a "supply card" which is also used to obtain subsidised foodstuffs such as sugar and flower.

The price of the cylinder outside the "subsidy card" will be LE30.

Since 1991, butane cylinders have been officially priced at LE2.75, with transportation to depots raising the cost to LE5. The gas is subsidised with an annual LE20 billion ($3.3 billion), around 20 percent of total subsidies granted to fuel in Egypt, according to government data.

As only a fraction of Egyptian households are connected to the natural gas grid, the vast majority of citizens are dependent on refillable butane cylinders for heating water and cooking.

On the ground, official prices of butane canisters are not observed. At times of shortages, the market price of a cylinder can go up to LE50 or even LE70.

Reducing fuel subsidies is one of the announced strategies of Egypt's cabinet to reduce the soaring budget deficit. The cuts also coincide with a final deal with the IMF for a $4.8 billion loan.

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