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Tuesday, 15 June 2021

Fuel prices rise

The prices of fuel products in Egypt have increased for the first time since 2019, reports Ahmed Kotb

Ahmed Kotb , Tuesday 27 Apr 2021
Fuel prices rise
photo: Reuters
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The Ministry of Petroleum’s Automatic Fuel Pricing Committee (AFPC) decided on Friday to increase fuel prices by LE0.25 per litre, bringing the per-litre prices of 80-octane, 92-octane, and 95-octane fuel to LE6.5, LE7.75, and LE8.75, respectively.

The committee also decided to keep the price of diesel unchanged at LE6.75 per litre, as well as the price of mazut fuel for industrial use at LE3.9 per ton.

These are the first price increases for fuel products since 2019 when the government applied a fifth and final tranche of fuel-subsidy cuts and adopted a quarterly indexation system under which fuel prices have been reviewed every three months by the AFPC since October 2019.

Hamdi Abdel-Aziz, spokesman for the Ministry of Petroleum, said that severe fluctuations had occurred in oil prices over the last few months.

He said during a phone call on Extra News TV channel that this had prompted the committee to re-evaluate the situation, taking into account the exceptional circumstances that the world is going through due to the Covid-19 pandemic and that have impacted the Egyptian economy.

Three factors had influenced the committee’s decision, he said. First was the price of Brent crude oil, the benchmark for the international oil market, the second was the exchange rate of the dollar against the Egyptian pound, and the third was the cost of trading fuel products.

Brent crude is expected to average around $61 per barrel in 2021. It stood at around $66 per barrel on Tuesday this week, representing a rebound from the 2020 average of around $42 per barrel.

The surge has raised concerns over its effect on transport costs, the prices of goods, and inflation.

The government denied on Monday that it would be increasing passenger fares for mass transportation as a result of increasing fuel prices.

Egypt’s minister of local development announced that governors would coordinate with security directorates and traffic departments to intensify campaigns in parking lots and various means of transportation to deal decisively with any attempts to hike previously decided tariffs.

Traders played down the effects of the latest increases on the prices of commodities in the marketplace. Ahmed Idris, head of the Agricultural Crops Division at the Cairo Chamber of Commerce, said that the prices of beans and legumes would not increase due to the increases in fuel prices.

“Gasoline is mostly used in private cars, and it is rarely used in vehicles transporting goods,” he added.

He said that goods transport was mostly carried out by vehicles using diesel rather than gasoline and that the price of diesel had not increased. As a result, there would be no additional cost in bringing goods to market. 

The last major increases in gasoline prices came in the summer of 2019. In October 2019, the adoption of the quarterly indexation system meant that the prices of all types of gasoline were reduced by between 2.8 per cent and 3.7 per cent.

The next review of fuel prices will take place at the next AFPC meeting in July.

 

*A version of this article appears in print in the 28 April, 2021 edition of Al-Ahram Weekly

 

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