The petroleum product subsidy bill exceeded EGP 110bn because of the high price of Brent oil of well over $40 per barrel, which was the estimated price in the budget, and the flotation of the pound.
Minister of Petroleum and Mineral Wealth Tarek El Molla told Daily News Egypt that the fuel subsidy increased well above EGP 110bn, from an estimated EGP 35.04bn in the budget.
He added that the state continues to restructure the petroleum subsidy scheme to deliver support to its beneficiaries, next to increasing spending on education, health, and services provided to citizens.
“We cannot continue subsidising fuel this way,” El-Molla stressed. “This is costing the state much money and does not reach its intended beneficiaries.”
In the current fiscal year budget, the government has allocated EGP 35bn to subsidise fuel. The expected price of the dollar was EGP 9, compared to an actual exchange rate of EGP 17.95 per dollar now. The Brent price was also estimated at $40 per barrel, but the real price hiked to $49.43 on Saturday.
The Ministry of Petroleum asked the Ministry of Finance to approve additional allocations this year.
The petroleum minister said that 50% of the subsidy bill is spent on providing diesel fuel to the local market, because it is the most consumed in various sectors, while the government spends about 20% of the support for the provision of LPG and 20% for gasoline, plus 10% for the subsidies for fuel oil and other petroleum derivatives.
The average monthly consumption of petroleum products and natural gas in the local market ranges around 6.5 million tonnes. Local sources provide a sheer total of 4.20 million tonnes from different concession areas.
Egypt imports 2.3 million tonnes per month of petroleum products to feed the local market.
Egypt produces about 5 billion cubic feet of gas per day and 695,000 barrels of crude oil. The production is channelled to the local market. The Ministry of Petroleum obtains the share of foreign companies’ production of gas and oil, and provide about 30% of the local market needs through imports.