Deadly Israeli airstrikes pound Gaza as Doha talks raise hopes for ceasefire    Egypt accelerates coastal protection projects amid rising climate threats    Egypt's PM calls Israeli war on Gaza 'most dangerous crisis' at BRICS summit    Egypt's FinMin urges BRICS to support debt sustainability    Egypt's gold prices up on July 6th    Venezuela vows to uphold sovereignty on 214th independence anniversary    ADIB Egypt publishes second sustainability report for 2024    Egypt, Saudi FMs discuss Gaza truce, Iran-Israel tensions    Over 215,000 projects funded under Mashrouak, exceeding EGP 33bn in May: Minister    Egypt, Norway hold informal talks ahead of global plastic treaty negotiations    Greco-Roman tombs with hieroglyphic inscriptions discovered in Aswan    UN conference cites Egypt's 'NWFE' programme as model for development finance    Global tour for Korean 'K-Comics' launches in Cairo with 'Hellbound' exhibition    China's factory output expands in June '25    Philip Morris Misr announces new price list effective 1 July    Egypt teams up with private sector to boost university rankings    Egypt reveals heritage e-training portal    Three ancient rock-cut tombs discovered in Aswan    Egypt condemns deadly terrorist attack in Niger    Egypt's FM, China's Wang discuss Iran-Israel escalation    Egypt's EHA, Schneider Electric sign MoU on sustainable infrastructure    Sisi launches new support initiative for families of war, terrorism victims    Grand Egyptian Museum opening delayed to Q4    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Egypt's EDA joins high-level Africa-Europe medicines regulatory talks    Egypt's Irrigation Minister urges scientific cooperation to tackle water scarcity    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    Egypt's Democratic Generation Party Evaluates 84 Candidates Ahead of Parliamentary Vote    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Cabinet approves establishment of national medical tourism council to boost healthcare sector    Egypt's PM follows up on Julius Nyerere dam project in Tanzania    Egypt's FM inspects Julius Nyerere Dam project in Tanzania    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Running dry
Published in Al-Ahram Weekly on 19 - 01 - 2012

The gasoline shortage that gripped Egypt this week may be the tip of an iceberg-sized package of economic woes, writes Nesma Nowar
Long queues of cars formed in front of gas stations in Cairo this week, causing heavier traffic congestion than usual on major roads. Brawls triggered by the long lines also claimed one life from gunshot on Tuesday in one of the cities, 15 May, on the periphery of Cairo.
Other gas stations were closed, displaying no gasoline signs. Predictably, gasoline was available on the black market, at up to six times the pump price. Karim Mabrouk, who lives in 6 October City, received offers to have the gasoline he needed delivered to his front door. The mark-up, though, was extortionate.
The fuel crunch crippled the activities of Cairo residents. Sarah Salah, who lives in Heliopolis, spent Monday morning trying to fill her tank. "I spent three hours visiting five stations in order to have enough gasoline to get to work," she told Al-Ahram Weekly. "In the end I had to return home."
The story was repeated across Cairo, as well as in other governorates. In Minya, Gharbiya and Sharqiya gasoline has been scarce since the beginning of the year, but the situation worsened this week.
Shortages are in the cheaper 80-octane gasoline as well as the more expensive 90- and 92-octane lead-free gasoline. Supplies of diesel are also short, while the dearth of butane gas cylinders seems endemic.
Hossam Arafat, head of the General Division of Petroleum Products at the Federation of Chambers of Commerce, says rumours of an impending price hike sent motorists lining up at gas stations.
Gasoline, diesel and butane gas cylinders are all sold at artificially low prices. Subsidies are provided through the Egyptian General Petroleum Corporation (EGPC) to keep prices of energy products to households, businesses and the government sector at a fraction of their real cost.
Energy subsidies in 2011-2012 cost the government a breathtaking LE95 billion. The current crisis was triggered, initially at least, by an earlier decision to increase the price of fuel to energy-intensive industries in an attempt to reign in a budget deficit of LE134 billion.
Government officials have repeatedly stressed there is no intention to increase fuel prices across the board.
"The problems do not lie in production," insists Minister of Petroleum Abdallah Ghorab, "but in distribution." Soon, he promises, they will be solved.
Such reassurances have had little impact on the street. An employee at a gas station in the Dokki area of Cairo reports that as soon as deliveries arrive they are sold, forcing the station to close until new supplies arrive. The fuel allotted to the station, he says, fell this month from 26,000 litres to just 6,000 litres. The number of tankers distributing fuel in the area has also decreased.
The general manager of a public gas stations, on the other hand, says fuel allotments for his station have doubled. "We used to receive deliveries of 40,000 litres, which were perfectly sufficient. Now we get 80,000 litres and it's finished almost immediately."
"At this time of the year 13 million tonnes of gasoline and 30 million tonnes of diesel a day would normally be sufficient," says Arafat. But rumours of price increases and the resulting panic buying has seen demand shot up by 50 per cent.
The situation has been compounded, according to Arafat, by seasonal interruptions in transport and shipping which has led to a drop in gasoline supply.
While officials blame the fuel shortage on rumours and the profiteering of black marketeers one expert from the petroleum industry, who prefers to remain anonymous, says the problem has a simpler, if more worrying, cause: the government lacks the liquidity to pay for the gasoline it needs.
He points out that not only does Egypt import 30 per cent of its gasoline needs but the raw materials required to maintain domestic production facilities for the remaining 70 per cent must also be imported. Such demands are placing increasing stress on an already faltering economy.
An International Monetary Fund mission is in Cairo this week to discuss a $3.2 billion loan which could be used to help prop up the balance of payments. Over the past 12 months Egypt's currency reserves have fallen by 50 per cent to $18 billion. Tourism, one of the main sources of foreign currency, has been battered by recent events. Egypt's current economic situation, which has seen repeated credit downgrades has, says the source, impacted negatively on import activities across the board.
The government's commitment to maintain such heavy subsidies on fuel, he says, is illogical, since people who can afford to buy a car can also pay more for gas.
A litre of Octane gasoline 80 is currently priced at LE0.9 ($0.15). Octane 90 sells for LE1.75 ($0.29), Octane 92 for LE1.85 ($0.3) and the highest quality, Octane 95, for LE2.75 ($0.45). Most economists agree that the subsidies that allow such low prices will have to be cut one way or another, not least because they are so inefficient at targeting the poor.
Both the source and Arafat agree that recurring shortages of gasoline, diesel and butane gas cylinders indicate a deep rooted problem of mismanagement from the government's side. But while Arafat expects the situation to normalise within two weeks as long as the government continues to supply the market with additional quantities of fuel and car drivers rationalise their consumption, the anonymous says the underlying problems will continue as long as "the new government replicates the same mistakes, and follows the same policies, as its predecessor".


Clic here to read the story from its source.