More costly cooking

Mai Ghandour, Tuesday 29 Mar 2022

Egyptian households are to pay more for butane gas cylinders following a price increase this week.

More costly cooking
Butane cylinder prices surged by 15 per cent in four months

The government this week increased the price of household and commercial butane gas cylinders by seven per cent, the second increase in four months.

The new hike in butane prices comes as global oil and natural gas prices have reached record levels in the light of the war in Ukraine. Egypt covers almost 55 per cent of its consumption of butane gas through imports. On Monday, the price of Brent crude oil hovered above $116 per barrel, up from around $92 on 23 February, the day before Russia invaded Ukraine.

The government decision was issued on 18 March and published in the official gazette on Thursday, with the price of 12.5kg butane gas cylinders for domestic use increasing by LE5 to LE75 ($4.77).

Meanwhile, the price of 25kg butane cylinders for commercial use surged by LE10 to LE150 ($9.54).

In December, Minister of Petroleum Tarek Al-Molla said that Egypt imports around half of its total butane gas consumption, adding that the state heavily subsidises the butane cylinders, which cost LE140 to produce.

While the government has raised petrol and other fuel prices several times over the last three years, it had kept the prices of butane gas cylinders fixed until last December when an eight per cent hike was introduced on the back of soaring oil prices.

In 2019, Egypt started implementing a quarterly automatic pricing mechanism on most petroleum products to adjust to global prices. Butane is exempted from the automatic pricing mechanism.

Millions of people in Egypt rely on butane gas cylinders for domestic or commercial use. Last summer, Egypt was producing up to a million cylinders per day, Hassan Nasr, head of the Division of Petroleum Products at the Federation of Egyptian Chambers of Commerce, told Al-Watan newspaper in August.

Nasr said that Egypt’s production of butane cylinders increased during the winter months to around 1.1 million per day.

Mohamed Ahmed Al-Gabalawi, deputy chair of the Energy and Environment Committee in the House of Representatives, the lower house of Egypt’s parliament, told the media this week that “global price increases are extremely exaggerated, and if they were implemented [in Egypt], they would wear out the Egyptian people.”

Al-Gabalawi said that the Russian-Ukrainian war had exacerbated rising commodity prices, leading to the rise in butane prices. However, he said that the local increases were a “slight bump” compared to international prices, thanks to the diversity of Egypt’s energy sources.

A 54-year-old merchant who sells butane gas cylinders in Dokki in Cairo told the Weekly that “this is one of those commodities that no matter how high its prices get people will still buy it anyway… It is a basic need, and so demand doesn’t really get affected.

“Would anyone be willing to give up their eating habits or even revisit them because of [hikes in] the prices of butane cylinders? I don’t think so,” he added.

He said that he usually sells butane cylinders for LE85 to LE100, depending on where he gets them from. The cylinders get more expensive the further they are from the factories that make them.

Prices are expected to witness further increases in Ramadan when demand almost doubles, according to Minister of Supply and Internal Trade Ali Moselhi.

Earlier this month, Egypt’s prosecution ordered the detention of 12 merchants on charges of hoarding commodities to take advantage of the global inflation and the Ramadan shopping season that is set to start in early April in order to hike prices.

Prime Minister Mustafa Madbouli has been calling on the government to intensify the monitoring of merchants to ensure that people are provided with goods at reasonable prices during Ramadan.

Meanwhile, Governor of Giza Ahmed Rashid this week urged a crackdown on illegal traders, assigning the heads of neighbourhoods to monitor markets and take measures against any violators.

The Giza governorate through its Abo al-Nomros Centre has been inspecting butane warehouses to ensure compliance with prices set for citizens as part of efforts to control prices and tighten controls over markets to protect people from commercial fraud and manipulation.

A report received by the Giza governorate from the Supply Investigation Department revealed that 77 violations have been filed thus far, according to a press statement.

The authorities are continuing campaigns to prevent all forms of fraud and to take all legal measures to protect consumer rights and preserve the health and safety of citizens, the statement added.

*A version of this article appears in print in the 24 March, 2022 edition of Al-Ahram Weekly.

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