The Ministry of Petroleum and Mineral Resources’ Automatic Fuel Pricing Committee (AFPC) decided on Friday to increase the prices of different grades of octane fuel by LE0.25 per litre, while keeping the price of diesel unchanged.

The decision has brought the per-litre prices of 80-octane, 92-octane, and 95-octane petrol to LE7.50, LE8.75, and LE9.75, respectively. This is the fifth increase in prices decided on at quarterly meetings of the AFPC.

The committee kept the price of diesel unchanged at LE6.75 per litre, as well as the price of a ton of diesel for use by the food and electricity industries. For other industries, the price was raised by 9.5 per cent to reach LE4,600 per ton.

The new prices will remain unchanged until the end of the second quarter of 2022 when the committee meets again to review prices for the third quarter of the year.

Under the AFPC’s remit, the prices of petroleum products are reviewed every three months, with any increase or decrease in prices not exceeding 10 per cent.

According to the ministry, Egypt consumes about 23 million litres of petrol and about 40 million litres of diesel a day, along with 100 million barrels of oil a year at a cost of $6 billion to the state budget.

The AFPC has kept diesel prices at LE6.75 per litre since its formation in 2019.

An official in the petroleum sector speaking without attribution said the decision to keep diesel prices unchanged was because diesel is a strategic commodity directly linked to people’s livelihoods and almost all goods and services provided locally.

The price of the fuel has a direct and indirect impact on the cost of transportation and the prices of food commodities, he said.

He added that the AFPC’s latest decisions represented an increase in fuel prices of only around three per cent despite the higher increases internationally.

Brent crude oil has risen by more than 40 per cent over the price originally planned for in the government budget, and the dollar has also gone up against the Egyptian pound by about 16 per cent.

On 21 March, the government allowed the value of the pound to depreciate, with the dollar currently trading at about LE18.5.

Prime Minister Mustafa Madbouli said in a statement that the cost of importing fuel products has recently almost doubled, putting significant pressure on the currency.

He called on people to rationalise their fuel consumption and preserve dollar resources.

Egypt imports about 25 to 30 per cent of its needs of petrol and diesel fuel at a cost of about $5.3 billion in 2021, according to the Ministry of Petroleum.

It might have to double the amount it sets aside to import crude oil from $500 million to $1 billion per month this year after rises in global oil prices, the cabinet has said.

Global oil prices approached their highest level at $140 a barrel in March following the outbreak of the Russian-Ukrainian war, before falling back to an average of $120 per barrel.

The price of a barrel of oil was around $113 this Tuesday.

Hamdi Abdel-Aziz, spokesman for the Ministry of Petroleum, said that when deciding on price changes the AFPC takes into account three factors.

The first is the price of Brent crude, the benchmark for the international oil market, the second is the exchange rate of the dollar against the pound, and the third is the cost of trading fuel products.

In a television interview, Abdel-Aziz said that ordinarily these factors would suggest a price increase of between 60 to 80 piastres per litre. But “the committee took into consideration present economic conditions, and it was decided, based on the committee’s recommendations, that the increase should be only 25 piastres,” he said.

Abdel-Aziz Al-Sayed, head of the poultry division at the Cairo Chamber of Commerce, said that the stability of diesel prices meant that poultry prices would not be affected by the increase in petrol prices.

“Poultry is transported from farms to shops by vehicles that use diesel. The price of this has not changed, so poultry prices will not rise,” he explained.

However, other sectors like electronics and home appliances have witnessed upward changes in prices. “The increase in fuel prices affects the prices of electrical appliances,” said Ashraf Hilal, head of the Electrical and Household Appliances Division at the Chamber of Commerce, adding that he expected an increase in prices.

“I hope the expected increase will not negatively affect sales,” he said.

Officials have warned against attempts to manipulate the market following the announcement of increased petrol prices, and they have announced no change in transportation fares.

Traffic laws make the manipulation of fares a criminal offence, with sanctions including fines or the withdrawal of licences.

The government earlier set the price of a barrel of oil in the budget for the 2021-22 fiscal year at $65. The new fiscal year begins in July, and the projected price is expected to be much higher.

*A version of this article appears in print in the 21 April, 2022 edition of Al-Ahram Weekly.