Savings on petroleum product subsidies will reach an estimated 35% of the current value of EGP 100 billion for the FY 2014/2015 budget if current oil prices continue as is, Minister of Petroleum Sherif Ismail said in statements to Daily News Egypt.

The savings will increase if prices drop further, he explained.

The savings would bring the total amount of funds allocated towards petroleum product subsidies to EGP 65 billion, while the same budget allocations reached EGP 126 billion for FY 2013/2014.

Ismail explained that consultations will begin on Sunday with an Iraqi delegation currently visiting Cairo, regarding importing Iraqi gas. Nonetheless, the quantity, price, and timing of supplies will depend on the outcome of negotiations, which will be completed soon.

However, Ismail said that total expected savings on petroleum products will not directly affect liquidity for either the petroleum sector or the state, because some sectors still have issues paying petroleum and natural gas bills.

Oil prices have fallen nearly 46% from their highest levels of the year; above $115 per barrel last June.

During the first quarter of FY 2014/2015, the cost of fuel subsidies reached EGP 22 billion, compared to EGP 31 billion for the corresponding period of the previous year.

Egypt raised energy prices for citizens and factories last July in order to free up approximately EGP 40 billion from the state budget for FY 2014/2015.

Egypt is working to eliminate energy subsidies completely within 3-5 years as part of an economic reform programme that aims to financially restructure the state budget.

Source: Daily News Egypt