Egypt's Senate to discuss new law imposing 'green fee' on diesel, gasoline vehicles

Gamal Essam El-Din , Sunday 9 Oct 2022

After holding four procedural sessions last week, the Senate – the consultative upper house – will get down to business on Monday to discuss a new government-drafted bill on vehicle manufacturing and amendments to the Environment Law (4/1994).

Egypt s Senate . Al-Ahram


The amendments to the Environment Law (4/1994) aim to contribute to improving the quality of life in Egypt in terms of promoting a wider use of environment-friendly means of transport.

They also aim to limit the use of vehicles that consume fuel that is harmful to nature and human beings, according to a report prepared by the Senate's Energy and Environment Committee and the Industry and Trade Committee.

"The Senate's two committees approved the amendments because they reflect the state's new strategy of gradually switching to a green economy based on stemming air pollution, improving quality of life, promoting a wider use of environment-friendly vehicles, expanding and funding the operation of environment-friendly vehicles and restricting the use of vehicles that cause harmful emissions to the environment and human health," said the report.

"The amendments are in line with Article 46 of Egypt's constitution, which obligates the state to take all measures necessary to conserve the environment and create a sound healthy life," it added.

Controversial amendments

2.5-5% green fee

To achieve the above, the amendments would see a 2.5 percent “green fee” levied for newly imported and locally produced vehicles fitted with engines that cause harmful emissions.

This includes vehicles with engines using diesel only, vehicles with engines using gasoline only, or vehicles using combined fuel (diesel – natural gas).

"Vehicles with electric engines or natgas-powered engines, plus government-owned and ambulance vehicles, will be exempted from paying this green fee," said the report.

Half of the proceeds of the new "green fee" will go to the Automotive Industry Development Fund and the other half to the Environment Protection Fund, it pointed out.

The amendment will entrust the Environmental Affairs Agency with the power of inspecting vehicles and issuing "environment adjustment certificates" after they pay the green fee.

The law states that the 2.5 percent green fee could be increased annually by 0.5 percent to reach 5 percent maximum.

"As for locally produced vehicles, this percent will be calculated according to the producer's selling price," said the report, adding that "as for imported vehicles, the fee will be calculated according to the value of the custom purposes bill plus the customs tax and other taxes and fees, and that in all circumstances the green fee will be imposed on vehicles one time."

The amendments state that the executive regulations will be drafted by both ministers of finance and the environment and ratified by the prime minister.

Senate rejects 2.5-5% green fee

The report, however, indicated that after consultation with government representatives, the Senate's two committees decided to add a new article (47) to the environment law stating that the Environmental Affairs Agency will be in charge of issuing "environment adjustment certificates" to locally produced and imported vehicles using diesel and gasoline fuel only after they pay a green fee ranging between EGP 1,000 minimum and EGP 50,000 maximum to be paid one time."

"This sum of money will replace the 2.5-5 percent green fee after members of the two committees raised concerns that this fee contravenes the constitution in terms of discriminating against vehicles in terms of value," said the report.

The Senate's two committees also rejected splitting the proceeds of the green fee between the Automotive Industry Development Fund and the Environment Protection Fund.

The two committees decided that 80 percent of the proceeds of the green fee would go to the environment-friendly electric vehicle assembly industry, 10 percent to the Environment Protection Fund, and 10 percent to the State Budget.

"This new division of fees will be more effective in achieving the objectives of the amendments in terms of offering the funds necessary for the creation of an electric vehicle assembly industry and at the same time helping the ministry of environment implement a sustainable strategy in this respect," said the report.

A new government-drafted bill on "establishing supreme council for vehicle manufacturing and a fund to manage the financing of a local environment-friendly electric vehicle assembly industry" will be also discussed by the Senate this week. 

According to a report prepared by the Senate's Industry and Trade Committee, the 14-article bill serves the government's long-term strategy to develop the local automotive industry and offers a package of facilities and incentives to investors to tap the new industry of electric vehicle (EV) assembly in Egypt.

According to the report, the bill states that "a Supreme Council for vehicle manufacturing is to be established and chaired by the prime minister or anyone acting on his behalf."

"The Council will include as a member the minister of trade and industry plus at least another two members with high experience in the area of vehicle manufacturing," the report said.

"The Council will be involved in drafting the general policies and strategies necessary for developing Egypt's local vehicle manufacturing industry," said the report, adding that "the Council will also take charge of drawing up the necessary legislative and administrative framework for this industry, eliminating obstacles, and exchanging expertise and agreements with countries with pioneering roles and great experience in the field of vehicle manufacturing."

The report also indicates that a fund to manage the financing of a local environment-friendly electric vehicle assembly industry will be also set up, with its headquarters located in greater Cairo and with branches or offices in all of Egypt.

"To achieve its objectives, the Fund will embark on offering a package of incentives and facilities to investors plus spending on innovation works necessary to create a competitive local environment-friendly vehicle manufacturing industry in Egypt," said the report.

The board of the fund will be chaired by the minister of finance and includes as members the ministers of planning and economic development, environment,  public enterprise, transport, trade and industry, and military production, the head of the General Authority for Industrial Development, the chairman of the Federation of the Egyptian Industries, the executive director of the General Investment Authority, and representatives for the cabinet, the ministry of interior, the Arab Industrialisation Organisation, the Vehicle Manufacturing Unit at the Trade and Industry Ministry, and a member of the Supreme Council for Vehicle Manufacturing.

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