As the Government readies its scheme to gradually lift fuel subsidies, Egyptian motorists are in the doldrums over fuel shortages, which have sent shockwaves into an already suffering market. Crowds of people holding plastic containers at fueling stations have compounded the worries of the man in the street. Transportation fares have increased over the past week nationwide due to a hike in prices. "A litre of diesel fuel sells for LE4 ($0.65) on the black market. I have to raise the fare, 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 riches 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. "Consecutive governments have dealt with fuel subsidies as a forbidden territory, a red line not to be crossed. And now after Hosni Mubarak was 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 Mohamed Morsi pledged to permanently put an end to the fuel crisis in the 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 each 1600cc cars would each get 1,800 litres of subsidised petrol, which translates into a mileage of 60km per day, annually. The scheme includes petrol 80 RON (research octane number), 90 RON, 92 RON, while petrol 95 RON (for expensive 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 at the end of 2010, or seven per 100 people, according to the State-run 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 sell for LE4. Due to a black market mafia, it sells for LE40. It costs the Government LE65, according to official figures. Roughly 40 per cent of Egypt's 90 million live on less than $2 a day, according to the World Bank. Egypt annually consumes 4.5 million tonnes of butane, 13.5 million tons 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 the fiscal year (FY) 2012/2013, the Government finds itself in "a critical situation" to meet growing demand for fuel at subsidised prices. Energy subsidies totaled LE90 billion in FY 2011/2012, 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 2012/2013. More alarmingly, analysts warn against a deficit, exceeding LE170 billion. Energy subsidies account for nearly 70 per cent of total government spending, according to official reports. Rumour has 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," said Reda Moharam, former head 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. The North African country also exports liquefied natural gas (LNG) to France and Spain through its Mediterranean port of Damietta.
