Egypt increases fuel prices, as part of austerity measures

Egypt today announced steep increases in fuel and cooking gas prices as part of the country's economic reforms and austerity measures designed to overhaul the country's ailing economy.

The new prices went into effect this morning, the Ministry of Oil said in a statement.

Prices for cooking gas increased from 60 to 100 pounds (from USD 3.30 to USD 5.60) per cylinder for commercial use, a more than 60-per cent increase, and from 30 to 50 pounds (USD 1.68 to USD 2.80) per cylinder for home use.

Ninety-two octane gasoline increased from 5 pounds to 6.75 pounds (from USD 0.28 to USD 0.38) per litre, or about a 34-per cent increase. Eighty octane gas increased from 3.65 to 5.5 pounds (from USD 0.20 to USD 0.31) per litre, nearly a 50 per cent increase.

Ninety-five octane gasoline increased from 6.6 pounds to 7.75 pounds (from USD 0.37 to USD 0.43), or nearly 17.5 per cent.

This is the third time the government has increased fuel prices since austerity measures were announced late 2015. The move is likely to send prices soaring further.

The new hikes will save up to 50 billion pounds (USD 2.8 billion) from funds allocated for state subsidies in the country's 2018-19 budget, Oil Minister Tarek el-Molla said.

Finance Minister Mohamed Maait said in a separate statement that slashing fuel subsidies was necessary to help bridge the country's general budget deficit as oil prices continue to surge, topping USD 80 per barrel.

The authorities made the increases as Egyptians have been celebrating Eid al-Fitr, the holiday that comes at the end of the holy month of Ramadan. They likely fear the hikes could cause protests such as when dozens of people demonstrated against an increase in fares for the Cairo metro in May.

In recent weeks, authorities raised metro fares by up to 250 per cent, drinking water by up to 45 per cent and electricity by 26 per cent.

The hikes come as Egypt presses ahead with a broader economic reform program that has included slashing subsidies, imposing a value-added tax and a currency flotation. The measures were aimed at qualifying for a three-year USD 12 billion bailout loan from the International Monetary Fund, which Egypt secured in 2016.

The tough austerity measures have won praise from economists and business leaders but have come as a heavy blow to poor and middle-class Egyptians.

Egypt's President Abdel-Fattah el-Sissi, the architect of the economic reforms - which none of his predecessors dared implement - defended his government's decisions to slash subsidies.

He said that the government spends some USD 18.6 billion a year on subsidies to cover fuel, food and electricity. Each family receives an average of about USD 60, he said.

Egypt's economy is still recovering from unrest following the 2011 uprising that toppled longtime ruler Hosni Mubarak.