The international price of Brent crude oil was among the elements which drove Egypt to set aside $8 billion for subsidising petroleum products, the petroleum authority chief said on Saturday. Egypt's cabinet approved on Thursday a draft of the state budget for the new fiscal year 2015/2016, which starts next month, with a deficit of 9.9 percent of the gross domestic product. The petroleum subsidy for the upcoming fiscal year will be lower than that of the current year, which is expected to reach $9.1 billion. The projected subsidy for the ongoing year is 30 percent lower than had been anticipated because of low oil prices in the second half of the year. An estimate that Brent crude oil will cost an average of $70 per barrel in the upcoming fiscal year reflects "positively" on reducing the import bill of crude oil, other petroleum products and natural gas, the Petroleum Authority Chief Tarek al-Mulla was cited by state news agency MENA as saying. Mulla said that there is a plan to rationalise fuel consumption by between 3 to 5 percent, which can save up to half a billion dollars. Last July, the Egyptian government reduced petroleum subsidies and introduced new taxes last July, hiking fuel prices by up to 78 percent. This decision was taken during the first month of President Abdel Fattah al-Sisi's rule. His administration has largely focused on reviving the economy, which has been affected by years of political turmoil. Mulla added that another element used to determine the value of next year's subsidy is the shift in the cement industry to rely on coal as a source of energy and the subsequent reduction in the amount of natural gas and fuel oil consumed by the industry. The cement production industry alone consumes 10 percent of all energy used in industry in Egypt. In April 2014, Egypt's cabinet approved the use of coal to generate energy, causing wide controversy as critics fear the shift will negatively impact the environment.
