Egypt’s government has finalised draft legislation placing more punitive penalties on those caught smuggling subsidised Egyptian petroleum products such as diesel, octane and butane, state-run daily newspaper Al-Ahram reported on Saturday.

Al-Ahram, who obtained a copy of the legal document, says the proposed legislation includes amendments to law 95 passed in 1945.

According to the draft, anyone who smuggles or attempts to smuggle the petroleum products out of the country will face a 2 to 5 year jail sentence and a fine of between LE150,000 and LE500,000.

Added to this, smugglers will have to pay a financial penalty estimated at double the value of the products illegally trafficked.

Should the criminal reoffend within the year, they will be sentenced to between five and seven years in jail and fined between LE100,000 and LE1 million.

The government's draft law is an attempt by the state to help reduce the gap between the rising demand for fuel and the state's shortage of petroleum product.

Earlier this month, Egyptian President Mohamed Morsi announced that he had solved around 85 per cent of the country's fuel crisis.

Morsi explained that the main cause of the ongoing petroleum problem is smuggling and profiteering and added that his clampdown on perpetrators was largely successful.

"We have thwarted the trafficking of 23 million litres of oil and diesel between August and September," he said.

The president also revealed that two senior officials in Egypt’s Ministry of Petroleum were recently convicted for illegally trading some five million litres of diesel and oil per month, worth LE686 million ($112.5million).

Egypt's government had planned to cut fuel subsidies by 27 per cent in the 2012/13 budget to LE70 billion, down from LE95 billion in the last fiscal year. Supply shortages and increases in domestic fuel demand, however, prompted the government to delay the move.