THE GOVERNMENT stealthily decided to raise the price of fuel oil by 100 per cent starting 1 January. One tonne of fuel oil was traded at LE1,000 from LE500 overnight, catching consumers and producers off guard. Although Prime Minister Ahmed Nazif's government was keen on reassuring consumers that the hike will not by any means reflect on the price of baladi bread, a staple food for the populace, experts believe that the decision will have several serious indirect implications. A general sense of anticipation abounds, particularly in sectors which largely depend on this type of energy. These include brick- making and baladi bread bakeries, especially traditional bakeries outside the capital which solely depend on fuel oil as a main source of energy. Meanwhile, the construction sector -- along with its feeding industries -- claims to be paralysed by the abrupt decision. Waleed Gamaleddin, chairman of the Chamber of Building Materials at the Federation of the Egyptian Industries, noted that the price of red bricks for construction rose from LE180 per 1,000 bricks to LE360 immediately after the decision. "Not to mention the fact that fuel oil produces at least 32 derivatives which represent the main components of different materials, such as asphalt and lubricants," Gamaleddin added.. Weary of shouldering an ever-increasing subsidy bill for energy sources, which exceeded LE42 billion in 2007, the government is slowly but steadily lifting subsidies, not only on energy sources but also on a long list of other indispensable commodities. Energy experts agree that this is the correct decision and that it is better taken sooner than later. "Energy efficiency in Egypt is perhaps among the lowest compared to other countries," asserted Salah Hafez, former deputy chairman of the Egyptian General Petroleum Corporation (EGPC). "Raising the prices of these sources is certain to compel different industries to monitor their energy losses." Despite the increase, the price of fuel oil prices is still incomparable to international prices, which range between LE1,600 and LE2,700 per tonne depending on quality. The subsidy for fuel oil has increased from almost LE1.5 million in 2000/2001 to LE5.8 million in 2005/2006, which represents almost 10 per cent of the total subsidy for petroleum products.
