The Ministry of Petroleum said this week that it would gradually increase the price of Mazut, a low-quality fuel oil used by furnaces at a number of cement companies, instead of implementing a previous decision taken early in December by Prime Minister Hisham Kandil to increase prices by 130 per cent. This would have meant that factories would have had to pay LE2,300 instead of LE1,000 for a tonne of Mazut. The decision gradually to increase the prices was taken in reaction to petitions from cement companies and workers' protests against increases in energy prices which they said would lead to the closure of factories and a subsequent loss of jobs. Representatives of cement-factory workers announced last Thursday that they would give the government a few days to revisit the price surge of Mazut before starting a strike. The workers' pressure, along with the companies' warnings that prices of cement would increase and workers would be laid off, led the government to decide on a gradual increase in the price of Mazut. The percentage by which the price will be gradually upped has not been announced. The Egyptian cement industry employs more than 15,000 workers. Minister of Petroleum Osama Kamal was quoted by the daily Al-Masry Al-Youm as saying that he was surprised by the criticism that the government faced when it decided to raise Mazut prices, adding that the cement companies had been increasing the price of their product from LE75 in 2007 to LE500 per tonne today. No one had forced them to lower their prices, he said. “Cement prices in Egypt are LE500 per tonne [approximately $83], around LE250 higher than average international prices,” Ahmed Al-Zeini, head of the Building Materials Division at the Cairo Chamber of Commerce, said, adding that the profit margin of the cement companies was already high and upping energy prices would not need to affect them. Al-Zeini said that only 10 per cent of cement factories use Mazut, with others using natural gas instead. “The government cannot afford to continue to subsidise energy for heavy industries that make profits not matched in any other country. The cement companies are exaggerating the impact of increasing Mazut prices on the industry,” he said. However, one production manager at one of Egypt's cement companies, who asked to remain anonymous, said that energy subsidies were needed if the industry was to grow. “Increasing energy prices by 130 per cent, as threatened by the government, would have left us with no choice but to shut down one or more factories and to pass the increase on to the end product,” he said. He said that demand is already low, and any price increase would worsen the situation. The government's decision to raise the prices of Mazut gradually was wise and would give the cement producers the chance to adapt and to keep prices stable. “Shifting to another source of energy, such as natural gas, will take time and money, but we plan to do so in the longer term,” he said. Al-Zeini said that the prices of cement were between LE450 and LE500 per tonne and that they had not recently increased. He added that 50 million tonnes of cement were produced in 2012, with some 10 million tonnes remaining in factory inventories.
