Thursday, July 31, 2014

Egypt cuts subsidies, increases petrol prices by up to 78%


Egypt to increase petrol prices by up to 78% as government cuts subsidies 
Electricity prices set to double over five years in attempt to revive economy battered by political turmoil
Saturday July 5, 2014

Egypt will start raising petrol prices by up to 78% from midnight on Friday, an oil ministry source told Reuters, as it tries to cut energy subsidies to ease the burden on its swelling budget deficit.
"The increase will start being implemented by midnight," the source said.

Food and energy subsidies traditionally eat up a quarter of state spending and the government is taking steps to reform its subsidy programme and revive an economy that has been battered by more than three years of political turmoil.

The source said the price of 92-octane petrol would be 2.60 Egyptian pounds (21p) a litre, up 40% from its current price of 1.85 pounds, while 80-octane petrol would rise to 1.60 pounds a litre, up 78%

Diesel will rise to 1.80 pounds a litre, an increase of 63%, while the less commonly used natural gas for vehicles will rise by 175% to 1.10 pounds a cubic metre.

The newly elected president, Abdel Fatah al-Sisi, has already raised electricity prices in his efforts to reform energy subsidies, one of a range of politically sensitive subsidies that also cover transport, food and agriculture.

Electricity prices began to rise this month under a plan to eliminate power subsidies within five years, the electricity minister said on Thursday.

Electricity prices are set to double over five years, but the introduction of a more graduated pricing structure aims to reduce the burden on the poor in a country where one person in four lives on less than $2 a day.

State finances have been decimated by more than three years of political turmoil, but the government is trying to improve them without provoking a backlash from Egyptians, who have helped topple two presidents since 2011 but have yet to see an improvement in living standards.

*Photo courtesy of Getty Images

No comments: