The country’s Oil Minister Tarek El Molla said that Egypt’s government seeks to remove subsidies on fuel products within the coming years.
The government intends to lift fuel subsidies altogether within the next five to ten years, while partly keeping subsidies on certain fuel products. The government, however, is not planning to raise the price of fuel during the current fiscal year, ending on June 30, 2018. The purpose behind lifting subsidies is to make sure that they benefit only those who are in need of them.
As the country’s recently-discovered giant Zohr gas field is scheduled to start production before the end of this year, Egypt would stop importing gas before the end of 2018. In the meantime, the cost of fuel products rose by 68 percent to 23.5 billion Egyptian pounds (US $1.33bn) in the first quarter of the 2017/2018 fiscal year compared to the same period last year.
As part of an IMF-sponsored economic reform program, Egypt began cutting fuel subsidies in November 2016 which, has saved the state LE 4 billion. Egypt was required to implement a number of economic reforms and austerity measures, to secure a US $12 billion loan from the IMF, including floating its currency and lifting decades-old subsidy regimes.
The cost of fuel subsidies went up by 135.3 percent year-on-year to LE 120 billion percent in 2016/2017 fiscal year, as a result of currency float, from LE 51 billion the previous year. During the current fiscal year, the government anticipates the cost of subsidies for the state to reach LE 110 billion. Source: Egyptian Streets PWKD16112017
Editors Note: Very cautious move given what is likely to happen over the next 10 years in the global fuels market. While I belive the right intent exists, the Egytian Authorities would need to move with specific schedule to deregulate with confirmed dates asap It appears to be a m ove to keep IMF happy in the short term(?)
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