Egypt raises price of subsidised butane by 7% amid sharp rise in global oil prices

Amr Kandil , Friday 18 Mar 2022

The Egyptian cabinet raised on Thursday the prices of household and commercial butane gas cylinders by seven percent starting Friday - the second such increase since December amid a sharp rise in oil prices globally.

File Photo: butane. Al-Ahram

As per the cabinet’s decree, which was published in the Official Gazette on Thursday, the price of 12.5 kilogram butane gas cylinders for domestic use will increase by EGP 5 to EGP 75 ($4.77).

Meanwhile, the price of 25 kilogram butane cylinders for commercial use will increase by EGP 10 to EGP 150 ($9.54).

In July 2019, Egypt started implementing a quarterly automatic pricing mechanism on all petroleum products to adjust for changes in global oil prices, while exempting the butane and petroleum products used by the electricity sector and bakeries.

Egypt has raised gasoline and fuel prices several times over the last three years - most recently in February.

However, during the same period, the government kept prices of butane gas cylinders fixed till last December.

While millions of citizens in Egypt rely on butane gas cylinders for domestic or commercial use, the government has worked since 1981 to connect natural gas to households.

As of January, the government has connected 13 million housing units, Minister of Petroleum and Mineral Resources Tarek El-Molla said in February.

Last summer, Egypt was producing up to a million gas cylinders on a daily basis, Hassan Nasr, the head for the general division of the petroleum products at the Federation of Egyptian Chambers of Commerce, told Al-Watan in August.

Nasr added that Egypt’ production of butane cylinders increases during winter to around 1.1 million.

In December, the government raised the price of the cylinders, also by seven percent, for the first time in two years.

The new hike in butane price comes as global oil and natural gas prices have reached record levels in light of the war in Ukraine.

On Friday, the price of Brent crude oil per barrel reached around $103, up from around $92 on 23 February, the day before Russia invaded Ukraine.

The Ministry of Petroleum and Mineral Resources had last raised their price by 66 percent in 2018 and again by 30 percent in 2019.

Butane gas cylinders usually reach consumers at remote distances from factories at higher prices.

In December, El-Molla said Egypt imports about 50 percent of its total butane gas consumption, adding that the state subsidises the butane cylinder, which cost EGP 140 to produce.

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