Egypt's Diesel crisis is back

Nesma Nowar, Thursday 19 May 2011

The government raced to contain the shortages in the supply of diesel fuel this week


The diesel shortages in Egypt's governorates this week crippled the activity of many vital sectors. The diesel fuel crisis is an annually recurring problem caused by an increase in the local consumption due to the agricultural harvest season.

Some governorates witnessed long queues of trucks, minibuses, agricultural tractors and lorries lining up along streets to get fuel causing heavy congestion on major roads and blocked traffic for long hours. Such incidents were reported in Daqahliya, Qalioubiya and Kafr Al-Sheikh governorates. Other provinces saw clashes between drivers leaving several injuries.

Diesel is considered the basic fuel for heavy transport vehicles, some bakeries, electricity generators, and some hotels in remote areas that need to generate their own electricity. According to the Ministry of Petroleum, Egypt's local production of diesel fuel covers 75 per cent of the country's consumption needs, while the rest is covered through import.

One expert from the petroleum industry, who preferred to remain anonymous, attributed a good part of the problem to what he called "the government's poor planning". He pointed out that Egypt has been repeatedly suffering diesel shortages for the past three years around this time of year. He explained that the government should examine diesel consumption on a monthly basis to provide the needed quantities beforehand. "Knowing that in summer consumption peaks, the government should have been prepared," he told Al-Ahram Weekly.

"Subsidized diesel should be mainly allocated to transport vehicles whether for goods and people," said the source explaining that currently the available diesel is also consumed by factories. In his opinion, factories should not rely on subsidised fuel. Diesel received some LE32 billion in subsidies in fiscal year 2010/2011 out of LE67 billion in total petroleum subsidies.

In a press statement this Monday, Gouda Abdel-Khalek, minister of social solidarity and internal trade, said that Prime Minister Essam Sharaf has assigned the Ministry of Finance to secure all the funds needed to cover the local demand of diesel fuel and butane gas. This came after Abdel-Khalek's meeting with minister of petroleum, Abdallah Ghorab, held to discuss citizens' complaints over shortages of diesel fuel and butane gas.

Abdel-Khalek added that supervisory authorities in both ministries are holding daily inspection campaigns on gas stations across the nation to control the sale of diesel fuel and prevent price hikes. Citizens have accused gas stations of hiding diesel fuel in an attempt to raise its prices.

Earlier this week, the Ministry of Finance approved the allocation of $300 million of the government's budget to the Egyptian General Petroleum Corporation (EGPC) to finance diesel fuel and butane gas imports from abroad on the back of the current supply shortages. EGPC announced on Sunday that it imported 140,000 tonnes of diesel, of which 35,000 have already arrived while the rest is expected to arrive within the next week.

Meanwhile Ghorab announced, on Monday, that the diesel crisis would end in a matter of days as production of diesel fuel has been increased by eight per cent starting May. He added that the security forces have aborted attempts at smuggling diesel fuel abroad. He further noted that the agricultural vehicles' consumption of diesel fuel during the harvest season escalated the problem in some governorates.

The diesel crunch was most apparent in Egypt's four northern governorates, where farmers are concerned for the wheat harvest which has come to a halt due to the need of diesel in order to run agricultural vehicles. Moreover, the crunch has also hit Egypt's fishermen who are unable to fill their boats, leading to a hike in fish prices.

Though Cairo was not severely hit by the diesel crisis, as it is an urban area, long lines of microbuses were seen at more than one petrol station in Cairo.

"Yesterday, microbuses queued in front of the station in order to fill their tanks with diesel, we did not have enough to distribute to all," said an employee at a gas station in Doqqi. He added that the quantity of diesel the station had was over within four hours from its arrival.

Trucks of major industrial companies were not able to make deliveries as they failed to fill up on gas. Moreover, bakeries, which work on diesel, have also suffered.

Farag Wahba, head of the bakeries division at the Cairo Chamber of Commerce, stated that this diesel crisis is not new. "In this period of time, each year we face such diesel problems," Wahba told the Weekly. "Once the harvest season ends, things get back to normal," he said.

Wahba added that he could not get diesel fuel from petrol stations, the matter that urged him to get it on the black market at any price.

"I bought one litre of diesel fuel at LE1.75 when its actual cost is LE0.22 piastre." Wahba pointed out that he had to get diesel at such high prices so as to keep his bakery running and prevent any increase in the cost of the government subsidised bread.

Short link: