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Wednesday, 24 August 2016

Gov’t to take away fuel subsidies by 2020, introduce cuts from this year

The flip-flopping on fuel subsidy removal continues: Egypt plans to remove fuel subsidies within three years, government sources told Reuters. “What was agreed lately with the IMF delegation in Egypt is cancelling fuel subsidies within three years,” one unnamed official said. The Oil Ministry’s spokesperson denied to Al Ahram that there is a plan to remove fuel subsidies within the timeframe specified, saying no decision has yet been made. The phase-out of fuel subsidies altogether by 2020 was first announced in November 2015, but the government backtracked the decision a month later, diluting the plan down to a promise made to the World Bank to cut fuel subsidies to 30% of their mid-2014 level.

…Fuel price hikes, the Reuters piece suggests. The government will increase fuel prices to 65% of their actual cost in the current 2016-17 fiscal year. The newswire notes that 92-octane fuel sells today for 58% of its cost, while 80 octane is sold for 57% of what it costs to produce. The more pronounced price hike is expected in diesel, which is being sold now at about 53% of cost. The government had said in April it plans to reduce expenditure on fuel subsidies by nearly 43% y-o-y in the FY2016-17 budget.

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