Egypt is ‘suffering’ due to high fuel subsidies: oil minister

Egypt’s petroleum minister stated Monday that the country is “suffering” due to fuel subsidies, saying these funds are better diverted to other areas such as health care and education.

Tarek El-Molla, speaking at a conference in Cairo, showed in a presentation that between July and September 2015, the government paid 42 per cent of the cost of 92-octane gasoline, which is used to fuel private vehicles owned by more affluent Egyptians.

While a litre of 92-octane gasoline cost 4.5 Egyptian pounds (57 cents), it sold at 2.6 pounds (33 cents) at the pump, a graph in his presentation showed. El-Molla also highlighted similar disparities in the true cost and selling price of other fuel products.

“I meant to show you this graph to let you feel the challenge and how Egypt is suffering from the subsidy,” El-Molla told the conference. “Can you believe that all of us coming today at this event in our vehicles and our cars, the government is subsidizing us?”

He said this was the first time he had spoken about the topic this openly.

President Abdel Fattah al-Sisi had cut fuel subsidies in 2014 by more than 70 per cent, in a move that caused a public outcry but was welcomed by economists as a necessary step to save public funds for much-needed development projects.

El-Molla declined to share a timeline or the government’s plans for future fuel subsidy cuts, saying announcing these plans ahead of time could prompt people to hoard gasoline to sell at a higher price later.

He said money spent on fuel subsidies should “at least get reduced to a reasonable number by which this money can be directed to health care, education that would help the development of the country.”

Source: The Associated Press