Cabinet Explains Consequences of Fuel Price Increase

The Egyptian Cabinet issued a report explaining its decision to increase fuel prices and how it affects consumers, reported Al Mal News. While the fuel prices hike will affect low-income citizens by not more than 10%, the government issued a number of social protection programs worth more than EGP 85b to protect them from being negatively affected by the burdens of economic reform, the report said.

The social protection decision will raise family monthly income by between EGP 300 and EGP 500, while the fuel increase is expected to raise the prices of other goods by 10% and transportation prices by 10% to 20%. Metro tickets and railways prices will not increase, according to the Minister of Petroleum and Mineral Resources, Tarek El Molla.

The government further increased each citizen’s share in supply commodities by 140% to reach EGP 50. The Cabinet also raised pensions and improved sewerage and water services.

It also decided not to increase the price of diesel provided to subsided bakeries as it will remain EGP 1.8 per litre. The government will bear the remaining cost so that the price of bread does not increase, said Prime Minister, Sherif Ismail.

While fuel prices were raised, the price of 95 octane benzene did not increase significantly as it had been subsided by only 5% of the main price. The subsidies of 95 octane benzene was totally removed in the recent changes, the report pointed out.

Moreover, Egypt is studying setting a delivery tariff for butane cylinders that will differ according to distance. The tariff will not exceed EGP 5, maintaning the total cost of a butane cylinder at around EGP 35 and EGP 40, according to the minister.

On June 29, the Cabinet decided to cut fuel subsidies in order to ease the budget deficit. The price of 92-octane gasoline rose to EGP 5 from EGP 3.5 per litre, and diesel and 80-octane, the most commonly used fuel category, increased from EGP 2.35 per litre to EGP 3.65 per litre.