Egypt struggles with fuel subsidy gap despite lower Brent crude prices

Despite a recent drop in global oil prices, Egypt continues to face a significant gap between the cost of producing and importing fuel and the price consumers pay at the pump, the Ministry of Petroleum said on Friday.

Although the price of Brent crude has declined recently, the Ministry noted that this has resulted in only a slight reduction in the cost of diesel, around 0.40 Egyptian pounds per litre. However, the government still bears a daily subsidy cost of around 366 million pounds, which translates to 11 billion pounds per month.

The subsidy burden remains high due to Egypt’s reliance on imports for essential fuel products. The country imports 40 per cent of its diesel, 50 per cent of its butane (LPG), and 25 per cent of its gasoline. As a result, the government is unable to fully absorb the rising costs of production and importation, despite global price declines.

The Ministry also cited ongoing geopolitical and economic instability, which has contributed to volatility in energy markets and the rising cost of fuel production, transportation, and importation.

Attribution: Amwal Al Ghad English