Fuel prices will witness another increase in 2019, Egyptian oil minister Tarek El Molla announced on June 20, only four days after the latest fuel price hike, Egypt Oil & Gas reports.
“We are following a five-year plan that the government started to implement in 2014 and this is only the fourth year,” he said in a press statement following the first cabinet meeting of the new prime minister Mostafa Madbouly.
On June 16 the Egyptian government announced that the price of 95-octane benzene would jump to EGP 7.75 per liter, up from EGP 6.60, while 92-octane benzene increased to EGP 6.75 from EGP 5. The largest price increase was applied to 80-octane benzene, which has risen to EGP 5.50 from EGP 3.65, Egypt Oil & Gas previously reported.
El Molla added that the oil and finance ministries will introduce a new automatic pricing mechanism by the end of this year to achieve transparency in fuel prices.
The main goal behind the price increases is to reduce the government expenditure. The government allocates EGP 89 billion for fuel subsidies in fiscal year 2018/19. “This number would have jumped to EGP 193 billion if we did not increase the prices,” El Molla explained.
“Reducing consumption is another motive behind prices increase. We noticed that gas consumption decreased 4% last year and 5% for diesel… This is compared to an average of 7% increase during previous years such as 2011,” the minister added.
The Egyptian government is still subsidizing around 25% of the fuel after the latest increase.
El Molla added that 80-octane benzene will soon be upgraded to 85 or 87-octane benzene for the customer’s convenience. “Only Egypt and maybe another country offers 80-octane benzene,” he explained.
The oil ministry has also canceled the smart card system for fuel as it was judged to be inefficient.