Egypt is considering whether to reduce fuel subsidies by EGP 20 billion  ($2.64 billion) next fiscal year, but it needs to study the social implications before reaching a decision, the investment minister said on Thursday.

The government cut the subsidies last summer, raising the prices of gasoline, diesel and natural gas by as much as 78%, a move lauded by economists but criticised by some ordinary Egyptians accustomed to cheap energy.

Investment Minister Ashraf Salman said in a statement that the government may aim to cut fuel subsidies to EGP 80 billion in the fiscal year starting June 30, instead of the EGP 100 billion now planned for.

He said that the reduction will come through using a smart card system aimed at better monitoring fuel consumption in the country of nearly 90 million people.

Egypt has benefited from a decline in global oil prices since last summer. But it has turned from being an energy exporter to becoming a net importer in recent years, with low production and high consumption causing a deficit that leads to regular blackouts.

The government has tried to address this by cutting subsidies to decrease consumption. It is also trying to encourage more oil and gas exploration as well as seeking energy shipments from abroad.

Source: Reuters