Subsidies on hydrocarbons will be completely canceled by the Egyptian government in 2020, Petroleum Minister Tarek al-Mulla said, adding that the prices of gasolibe 80 and 92 will not be raised until the end of the current fiscal year ending in June.
He added in a statement to al-Hekaya program on MBC Masr on Monday evening that the fuel subsidies provided by the government are up to LE 90 billion during the current fiscal year, and until the end of fiscal year on June 30, 2019, will not be generalized for the automatic pricing experience on petrol 80 and 92.
The government will not link the price of gasoline 80 and 92 to global prices as it did with gasoline 95, until June 2019, he said.
“We will not risk taking action that will cause anxiety or inconvenience to citizens,” he continued.
The cabinet announced pricing gasoline 95 according to the price of Brent oil as a first step, Mulla said, stressing that gasoline 95 will no longer have a fixed price starting in April.
The government plans to substitute gasoline 80 with gasoline 87 in the future, he said, noting that experiments are currently being conducted on the new petroleum product in the laboratories of the Ministry of Petroleum.
The aim of providing higher octane gasoline on the market is to improve the products provided to the consumer and modern cars, as well as to match developed countries and the oil market through providing high-quality products, said Mulla.
In an attempt to revive its faltering economy since 2011, Egypt obtained an IMF loan in 2016 in exchange for implementing a rigorous reform program, beginning with floating the pound. Egypt began implementing the IMF reform program in November 2016. The international lender made a deal to provide Egypt with a $12 billion loan in exchange for wide-ranging structural economic reforms.
The reforms include a raft of measures such as devaluing the pound currency, loosening capital controls, ending energy subsidies, reforming public enterprises and overhauling monetary policy – all in a bid to restore economic stability and long-term growth.
The first step the IMF commended was the flotation of the pound, a measure quickly taken in November 2016. The following year, Egypt slashed parts of its energy subsidies, resulting in a 60 percent surge in fuel prices.
The IMF has since recommended that the government continue removing subsidies on fuel.
Edited translation from Al-Masry Al-Youm