People jostle for a fuel dispenser nozzle as a worker fills the tank of a car at a petrol station in Cairo (File Photo: Reuters)
Egypt has been applying a quarterly price index mechanism on all petroleum products since the beginning of FY2019/2020, in light of global oil prices and the US dollar prices against the Egyptian pound, in a range of ±10 percent.
The FAPC has held regularly meeting at the beginning of each quarter since then to announce price changes.
According to the source, who preferred to remain anonymous, the committee held its quarterly meeting as scheduled in January and drafted its non-committal recommendations regarding fuel prices movement. Yet the government decided not to announce the meeting outcomes at the time to avoid negative feedback from the local market.
The Egyptian pound performance is currently at its lowest against the US dollar, losing over 100 percent of its rate compared to March 2022’s level. The US dollar is currently trading for over EGP 30.
The committee said in its report that the just price of fuels in the local market in the current phase is EGP 18 per litre in light of oil and gas prices hikes globally and the global inflationary wave.
“But, the fuel pricing mechanism allows fuel prices movement within the range pf ±10 percent of the current prices. Thus, the government is considering currently which ministry would bear the cost difference going forward, either the Ministry of Finance or Ministry of Petroleum and Mineral Resources,” the source said.
The source also expected the pricing committee to announce the new prices during this week or by the beginning of the next week at latest, especially now that Egypt has clear commitments regarding fuel pricing submitted to the International Monetary Fund (IMF) under the new $3 billion loan deal approved for the country in a 46-month programme.
The government is committed to fully implement the fuel price indexation mechanism through refraining from applying any formulaic decreases in fuel prices until fuel subsidies, for each product subject to the mechanism, have been eliminated in the FY2022/2023.
Further increases in the second half of the current FY2022/2023 are expected.
In its final meeting for 2022, held in October, the government applied the pricing committee’s recommendation of maintaining the fuel prices through end of the year.
Accordingly, the price per litre of 80-octane fuel was kept at EGP 8, 92-octane at EGP 9.25, and 95-octane fuel at EGP 10.75.
The source told Ahram Online that the government has no intention of terminating the automatic pricing mechanism for fuels, at least through end of the current FY2022/2023.