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BID TO CUT DEFICIT

Hefty fuel price rise for Egypt industries

Cairo, February 20, 2013

 

Egypt's government announced new fuel prices for many sectors of the economy on Tuesday which industry sources said were 50 percent higher than previous levels, triggering protests by factory owners affected by the increase.
 
Several hundred people employed in the brick manufacturing industry - one of the sectors affected - blocked roads in Cairo and Minya, south of the capital, to protest at the price rises, a security source said.
 
With the economy in crisis, the Egyptian government is under pressure to rein in a deficit enlarged by energy subsidies that account for a fifth of the budget. The government must curb the subsidies to secure a vital $4.8 billion International Monetary Fund loan, economists say.
 
In the official gazette the government said the price of fuel oil, which is widely used in energy-intensive local industries, would be 1,500 Egyptian pounds ($220) per tonne.
 
This would apply for all industries other than bakeries, electricity producers and food manufacturers to be named by the ministry of industry.
 
Tuesday's government announcement gave no comparative figure or say when the new prices would come into effect, but industry sources said they had been raised from 1,000 pounds previously.
 
Prices of locally-produced natural gas, fuel oil and diesel for manufacturers of cement and bricks were also raised by 50 percent, the industry sources said.
 
As part of moves to cut subsidy spending, the government plans to start rationing subsidised gasoline through a system of smart cards at the beginning of July, the minister of petroleum said on Monday.
 
The final ratification of the IMF loan was postponed in December at Egypt's behest because of political unrest.
 
Since then, the country's reserves of foreign exchange have fallen to $13.6 billion, below the $15 billion level required to cover three months' worth of imports, and the currency has fallen by 8 percent against the US dollar to a record low.  - Reuters



Tags: Egypt | economy | industries | fuel |

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