Profiteers and 'thugs' are seizing 40 per cent of Egypt's supply of subsidised energy, the Minister of Finance said on Monday, suggesting further cuts are needed to cover the losses.
Speaking before the economic and financial affairs committee of Egypt's upper house of Parliament, Momtaz El-Said described a well-oiled system of profiteering.
A single butane cylinder, which costs the government LE61 ($10.10), often ends up on the black market at several times the state-subsidised price of LE2.5 ($0.40), El-Said said.
In June, Egypt's interim government announced it would slash fuel subsidies by 27 per cent in the 2012/13 financial year.
The amount spent on fuel subsidies is set to fall to LE70 billion in 2012/13 from LE95 billion the previous year. The remaining sum will still make up 48 per cent of Egypt's total subsidies bill of LE145.8 billion.
The removal of subsidies for fuel oil -- generally used by industry -- is the main driver behind the drop in overall fuel subsidies. Over LE10 billion was earmarked for fuel oil subsidies in the 2011/12 budget.
An official document later obtained by Ahram Online suggested that the government will fully remove all fuel subsidies for energy-intensive industries by the end of 2012/13.
According to statistics mentioned before Egypt's now-dissolved parliament, around 4.5 million households have piped natural gas while some 12 million Egyptian homes use canisters.
El-Said also told the committee that the government is preparing a short-term economic reform programme to qualify for a mooted $4.8 billion loan from the International Monetary Fund (IMF).
The IMF's only condition for loaning to Egypt is that the country presents a programme for restructuring taxes and improving the 'social situation of Egyptians', El Said told the parliamentary committee on Monday.
Cairo has seen sporadic protests against IMF borrowing over the last few weeks. Demonstrators have called on Egypt's leaders to reject proposals for loans from the international fund which, they say, would further impoverish the Egyptian people.