An Egyptian government official has confirmed that the prices of petroleum products will be put up within two days by one Egyptian pound. The top price will be 2.75 Egyptian pounds per litre.
The price rise follows the demand of President Abdul Fattah Al-Sisi, who announced on Tuesday that he refused to endorse the budget because of the huge deficit. The government of Ibrahim Mahlab hopes to reduce the deficit by decreasing fuel subsidies and increasing taxes. The government issued the budget during the presidential election in May. It reduced energy subsidies to 104 billion Egyptian pounds ($14.5 billion) compared with 134.29 billion in the current fiscal year, a 22 per cent reduction.
The official said that the price increase will apply from Thursday or Friday; the weekend break, it is believed, will enable the government to control any outbreak of civil unrest and protests against the price hike.
Factories will not be liable to pay the increased prices, as agreed with the Union of Egyptian Industries in April. Its members believe that subsidies should be reduced gradually over four years. The government tried to implement this plan last month but made a U-turn because it would have coincided with the presidential elections and might have had an impact on the voting process.
The anonymous source told Alarabia Aljadid that the first Ibrahim Mahlab government considered putting up fuel prices (petrol, diesel and gas) and that there was disagreement over the amount of the increase. It was eventually agreed to postpone the matter until after the presidential election to avoid disturbing the market and affecting the vote. He added that the cabinet’s economic committee studied several proposals for increasing fuel prices before opting for the proposed increase.
An official in the General Union of Chambers of Commerce pointed out that had it not been for financial support from Saudi Arabia, Egypt would have seen a stifling fuel crisis much bigger than the one that occurred during the time in office of former president Mohamed Morsi.
According to Tamir Abu Bakr, head of the energy committee within the Union of Egyptian Industries, putting up energy prices in one go will have a catastrophic impact on industry. “It will lead to the closure of many facilities and many redundancies.” He favours gradual increases over four years.