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Sunday, 17 April 2022

We’re paying more at the pumps

The government raised fuel prices by c. 3% over the weekend amid a rise in global oil prices on the back of Russia’s invasion of Ukraine. In its latest quarterly meeting, the fuel pricing committee decided to raise prices at the pumps by another EGP 0.25 per liter for 95, 92 and 80 octane fuel for 2Q 2022, the Oil Ministry said in a statement.

As of Friday:

  • 95-octane is EGP 9.75 per liter, up 2.6% from EGP 9.50;
  • 92-octane is EGP 8.75, up 2.9% from EGP 8.50;
  • 80-octane is EGP 7.50, up 3.4% from EGP 7.25
  • Diesel is unchanged at EGP 6.75.

Mazut fuel oil prices rose 9.5% to EGP 4.6k per tonne for all industries except food and electricity producers, which will continue to purchase a tonne of the fuel for EGP 4.2k.

This is the fifth consecutive price hike: Fuel prices have now risen by 15-20% since April last year, when the government first hiked prices in response to an upswing in commodity prices. Additional EGP 0.25 increases came into effect in July, October, and February.

These rates will remain fixed through to the end of 2Q 2022, when the committee next meets to set prices.

Limited impact on inflation? “We do not expect much of an impact on headline inflation from the implemented increase in prices given that the price of diesel, which is the main fuel used in the transportation of commodities, remains unchanged,” Alia Mamdouh, Beltone Financial’s head of macro research, wrote in a note Thursday.

Global oil prices have been climbing this year: The price of Brent surged almost 40% during 1Q 2022 as Russia’s invasion of Ukraine shocked global markets. Analysts are expecting Brent to remain above USD 100 a barrel for the remainder of this calendar year as the spillover effects from the Ukraine conflict continue to weigh on an already tight market. In its latest forecast, Goldman Sachs lowered its Brent projections by USD 15 to USD 120 per barrel through 2H 2022 and currently expects prices to average USD 110 in 2023.

And oil markets could soon be heading towards a major supply crisis, says IEA: Sanctions imposed on Russia over the past several weeks could trigger the “biggest supply crisis in decades” for global energy markets, according to the International Energy Agency’s (IEA) March oil market report. Russia is the largest oil and products exporter in the world, and sanctions are expected to push down Russia’s oil output by some 3 mn barrels per day this month as buyers shy away from the oil Moscow produces, the IEA said.

The news is getting some international ink\: Associated Press.

IN OTHER ENERGY NEWS

Alternative fuels could soon need to account for at least 15% of cement factories’ energy consumption under a proposal being studied by the Environment Ministry, Waste Management Regulatory Authority Deputy Head Yasser Mahgoub told Enterprise. The government currently requires (pdf) cement factories to use refuse-derived fuel (RDF, or energy made from waste) for at least 10% of their total energy consumption. The new rule would be enforced by the Environmental Affairs Agency on all cement factories that use coal as a primary fuel, Environment Minister Yasmine Fouad told Al Mal last week.

Coal is the main source of fuel used by cement companies in Egypt. As one of the most-polluting industries, cement manufacturing has been under pressure to decarbonize by phasing out coal-based heating processes for alternative fuels.

And it’s getting more expensive: Though most cement companies have reverted to coal in response to the lifting of fuel subsidies since 2016, surging global coal prices caused by the Ukraine war are making it an increasingly unaffordable source of energy.

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