File Photo: An employee holds up a fuel pump nozzle and banknotes after filling up a car at a CO-OP petrol station in Cairo, January 13, 2015. (Photo: Reuters)
Egypt’s government published on Monday a document giving the cost of fuel imports at an oil price of 75 USD per barrel, ahead of expected fuel subsidy cuts this summer.
According to the document, the government bears a total cost of EGP 103.798 billion from fuel imports -- the difference between import costs and local selling prices.
The government plans to cut fuel subsidies to EGP 89 billion in fiscal year 2018-19, from an allocation of EGP 120 billion in the current year's budget, in a bid to ease the budget deficit to 8.4 percent of GDP.
The 2018-19 budget assumes oil prices of $67 per barrel, up from $55 per barrel last year. However, oil prices reached $80 per barrel on 17 May for the first time since November 2014.
Egypt is implementing a five-year plan to cut subsidies as part of an economic programme to ease the state’s budget deficit and encourage foreign investment.
Monday's document said the government imports butane at a cost of EGP 175.2 per cylinder and sells it locally at EGP 30 per cylinder. With government imports reaching 183 million cylinders of butane this year, the government bears subsidies worth EGP 26.571 billion.
The government sells Octane 92 locally at EGP 5 per litre while importing it for EGP 10.84. With imports totalling 1.751 billion litres of octane 92 this year, the government bears EGP 10.225 billion in costs.
For Octane 80, the government sells locally at EGP 3.65 per litre, while importing it for EGP 9.66. With imports totalling 2.068 billion litres this year, the government bears EGP 12.532 billion in costs.
For diesel, the government sells locally at EGP 3.65 per litre while importing it for EGP 11.14. With imports totalling 6.780 billion litres this year, the government bears 50.782 billion in costs.
For fuel oil, the government sells locally at EGP 2,510 per ton while importing it for EGP 8,098. With imports totalling 0.66 million tons this year, the government bears EGP 3.688 billion in costs.
The document also outlined fuel imports in terms of opportunity costs.
The government has been leading a strategy of investment in national projects since 2014 to spur growth, with a growth target of 5.8 percent of GDP next fiscal year. This includes the new administrative capital, new Suez Canal and a project to develop 4,000 kilometres of road network.
The government said earlier this year that it will allocate EGP 322 billion in fiscal year 2018-19 for social safety programs, around EGP 1 billion more than in FY 2017-2018.
It also allocated EGP 60 billion to buy basic commodities and services, up from a EGP 51.6 billion target for FY 2017-18.
Egypt increased fuel and electricity prices by 50% and 42% respectively in July 2017.
The government presented the 2018-19 budget draft to the House of Representatives in March.
The International Monetary Fund (IMF) conducted earlier this month its third review of Egypt's economic reform programme.
Egypt and the IMF then reached a staff-level agreement for the disbursal of $2 billion which, if approved by the IMF executive board, would bring total disbursements to $8 billion under the $12 billion loan agreement.