Minister of Petroleum Tarek El Molla affirmed that the government is still providing petroleum product subsidies, despite the recent increase in fuel prices imposed in June, as the state subsidises gasoline 92 by EGP 1.4 per litre, according to the ministry’s statement.
According to El Molla, the cost of producing gasoline 92 amounts to EGP 6.4 per litre, while it is still sold at EGP 5 per litre, adding that the cost of producing gasoline 80 is up to EGP 5.7 per litre, while its price for consumers reached EGP 3.65 per litre.
In the same context, the cost of producing diesel is about EGP 5.7 per litre, while its selling price recorded EGP 3.65 per litre. In addition, the cost of a liquefied petroleum gas (LPG) cylinder is EGP 124, while its price on the local market is EGP 30. Mazut costs EGP 4,300 per tonne, while it is sold to cement factories at EGP 3,500 per tonne and to other industries at EGP 2,100 per tonne.
El Molla said that the cost of petroleum products is calculated on the basis of the average price of Brent crude at $52 per barrel and the average exchange rate of EGP 17.7 per US dollar.
The state budget allocated EGP 27.5bn for producing petroleum products in the first quarter of the fiscal year (FY) 2017/2018, while it actually costs EGP 23.6bn, saving EGP 4bn.
El Molla added that fuel subsidies, which represent the difference between the global price of petroleum products and its price on the local market, is based on a number of main factors, the most important of which are the volume of domestic consumption of petroleum products, Brent crude oil prices, and foreign exchange rates.
The state budget of FY 2017/2018 allocated EGP 110.14bn for fuel subsidies, although the ministry of petroleum expected that it will only need EGP 100-105bn, benefitting from the recent price hikes of petroleum products in June.
The government raised fuel prices at the end of last June, where the price of a litre of gasoline 92 rose to EGP 5, up from EGP 3.5. The price of gasoline 80 and diesel fuel both increased from EGP 2.35 to EGP 3.65. The price of a cubic metre of natural gas for cars was lifted from EGP 1.6 to EGP 2, according to El Molla.
Moreover, the price of gasoline 95 increased from EGP 6.25 to EGP 6.6, while LPG cylinders increased to EGP 30, up from EGP 15 for homes, and EGP 60 instead of EGP 30 for commercial use.