Pouring fuel on to the fire? Egypt set to cut gasoline subsidies within days
The Egyptian government will cut subsidies on 95-octane gasoline in a few days. Minister of Finance Momtaz Al-Said told Shura Council members Sunday that the government is going to take the step soon.
"It is part of a plan to reduce subsidies," the minister said, adding that the government will work on later on delivering subsidised canisters of butane gas to the poorest citizens.
The government announced in the 2012/2013 budget a cut of subsidies for energy to LE70 billion. Many experts estimate that the government goal is too optimistic. Last year, subsidies were set to reach some LE95 billion in the budget, but are estimated to have actually reached LE115 billion.
Many kinds of subsidised octane gas are available on the Egyptian market. Raising the price of 95-octane won't likely have any effect on inflation as it is used exclusively by owners of large and expensive cars.
The government hopes to cut gasoline subsidies from LE21 billion to LE13 billion.
Reuters reported Sunday that Egypt could save LE35 billion ($5.7 billion) a year with planned energy subsidy reforms, according to an Egyptian newspaper.
Egypt's petroleum ministry has proposed the introduction of 85-octane to replace the current 80-octane, and to be priced at around LE1.25 ($0.3) per litre.
80-octane currently sells at LE0.9 ($0.15) per litre, 90-octane at LE1.75 ($0.29) per litre, and 92-octane at LE1.85 ($0.3) per litre.