Egyptian Petroleum Minister, Tarek El Molla, said that Egypt is “suffering” from fuel subsidies and that funding for subsidies are better spent on other areas, such as health and education, AP reports. According to the minister, this was the first time he discussed the topic of subsidy disadvantages publicly.
In a presentation in Cairo, the minister said that between July and September 2015, the Egyptian government covered 42% of the cost of 92-octane gasoline, which is used in most vehicles in Egypt. During that time frame, a liter of 92-octane gasoline cost the government EGP4.5, while the cost at the pump was EGP2.6. The minister noted other disparities between true costs and prices of energy products.
“I meant to show you this graph to let you feel the challenge and how Egypt is suffering from the subsidy,” El Molla said. “Can you believe that all of us coming today at this event in our vehicles and our cars, the government is subsidizing us?”
Beginning in the summer of 2014, the government has started cutting subsidies heavily for fuel, although low prices have rolled back plans for full elimination. The government also aims to implement a “smart card” system to better regulate subsidies, but the effort has been postponed.