As the Government readies its scheme to gradually lift fuel subsidies, motorists are in the doldrums over fuel shortages, which have sent shockwaves through an already suffering market. Crowds of people holding plastic containers at petrol stations have compounded the worries of the man in the street. Transportation fares have increased nationwide over the past week due to a hike in prices. "A litre of diesel fuel sells for LE4 [$0.65] on the black market. I've had to raise the fares; otherwise I'd go out of business," Hassan Shaaban, a microbus driver, told the Egyptian Mail. Statements made by Oil Minister Osama Kamal that "the rich and the poor" would get "equal quotas" of subsidised fuel up to a certain limit have stoked worries among experts and the man in the street. "Successive governments have dealt with fuel subsidies as forbidden territory, a red line not to be crossed. And now, after Hosni Mubarak has been toppled by a revolution calling for social justice and combating poverty, fuel subsidies are being lifted. Which planet is this?" wonders Mohamed Saad, a 26-year-old political activist. President Mohammed Morsi pledged to permanently put an end to the fuel crisis in his first 100 days in office. Ibrahim Zahran, a former chairman of Khalda Petroleum, believes President Morsi has failed to end the crisis because "he has dealt with it as a distribution problem". "This is wrong, of course. The problem is an output shortage. Egypt produces plenty of naphtha, which can be transformed into petrol by a catalytic reforming process using a machine costing LE50 million," Zahran said. The Oil Minister said 1,600cc cars would each get 1,800 litres of subsidised petrol annually, which translates into a mileage of 60km per day. The scheme includes the petrols 80 RON (research octane number), 90 RON and 92 RON, while petrol 95 RON (for luxury cars) will be available at cost value. Oil subsidies cover petrol, diesel, gas oil, natural gas, kerosene and butane, according to the Egyptian General Petroleum Corporation (EGPC). Local petrol stations sell 80 RON for LE0.9 per litre, while 90 RON sells for LE1.75. There were 5.85 million cars in Egypt at the end of 2010, or seven per 100 people, according to the state Central Agency for Public Mobilisation and Statistics (CAPMAS). There are around 300,000 tok-toks nationwide, according to unofficial estimates. As for butane, each family will get up to two subsidised canisters per month. A subsidised butane cylinder sells for LE4. Due to a black market Mafia, cylinders sell for as much as LE40 each. Each cylinder costs the Government LE65 to produce, according to official figures. Roughly 40 per cent of Egypt's 90 million citizens live on less than $2 a day, according to the World Bank. Egypt annually consumes 4.5 million tonnes of butane, 13.5 million tonnes of diesel oil, 5.7 million tonnes of petrol and 9.2 million tonnes of gas oil, according to the Ministry of Oil. Egypt imports 2.5 million tonnes of butane, 4.3 million tonnes of diesel oil and around 1 million tonnes of petrol annually. With energy subsidies forecast to hit LE114 billion ($18.7 billion) in fiscal year (FY) 2012-13, the Government finds itself in "a critical situation" to meet growing demand for fuel at subsidised prices. Energy subsidies totalled LE90 billion in FY 2011-12, according to the Ministry of Finance. Egypt's fiscal year begins on July 1. According to official estimates, the state budget is expected to incur a deficit worth LE135 billion in FY 2012-13. More alarmingly, analysts warn of a deficit that could exceed LE170 billion. Energy subsidies account for nearly 70 per cent of total governmental spending, according to official reports. Rumour has it that the Government is under increasing pressure from the International Monetary Fund (IMF) to phase out fuel subsidies to get a $4.8 billion financial facility to help its cash-strapped economy stand on its feet again. But officials have dismissed such suggestions as allegations. "Fuel quotas and butane smart cards are part of a deal with the IMF to get the loan," says Reda Moharam, a former dean of the Engineering Faculty of Al-Azhar University. Egypt's proven reserves of natural gas are estimated at 77.2 trillion cubic feet, according to the Ministry of Oil. Although Egypt exports natural gas to Jordan, Syria, Lebanon and Israel through Sinai-based pipelines, it is a net importer of fuel. It also exports liquefied natural gas (LNG) to France and Spain through its Mediterranean port of Damietta.
