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Sunday, 12 November 2017

Fuel subsidy spending rises 68% y-o-y in 1Q2017-18, El Molla says

Fuel subsidy costs rose 68% y-o-y to EGP 23.5 bn in 1Q2017-18, up from EGP 14 bn in the same quarter of the previous fiscal year, Oil Minister Tarek El Molla told reporters yesterday, Reuters reports. The minister reaffirmed that the government would not raise fuel subsidies again during this fiscal year, but said gasoline subsidies will be lifted altogether within five to ten years; some form of subsidy will remain in place for diesel fuel and gas cylinders, according to Ahram Online. The partial lifting of fuel subsidies since November 2016 has trimmed EGP 4 bn off the state’s expenditures this year, El Molla says. As we noted previously, the government is projecting that spending on fuel subsidies this fiscal year will record EGP 110 bn.

Egypt plans to completely halt importing LNG by the end of 2018, particularly as domestic production will be given a further boost once the Zohr field comes online, El Molla said, Ahram Gate reports. The imports will continue through 1H2018 as Egypt is tied to contracts with LNG importers, according to the minister. Ending imports comes as Egypt plans to turn into a regional energy hub by 2018.

El Molla also confirmed that the government is planning to repay another portion of its arrears to international oil companies before the end of December, according to Youm7. Arrears to IOC had dropped to USD 2.3 bn in September.

Separately, El Molla announced that the government is in talks to import more crude from Iraq, buying as much as 24 mn bbl per year at a rate of 2 mn bbl per month, up from 12 mn bbl per year under the current contract. The new agreement is expected to be signed in January 2018.

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