Prime Minister Moustafa Madbouli said Egypt is one of the cheapest countries in the world in terms of diesel fuel pricing.
Re-pricing of fuel includes an increase in diesel prices for the first time ever in 30 months, he added in remarks Thursday 24/7/2022.
The decision was taken by the Fuel Automatic Pricing Committee, according to him. The premier said the government is working hard to address unprecedented challenges.
Madbouli said the world has been experiencing for two years a major global crisis that started with coronavirus pandemic to be followed by a global inflation wave prompted by a disruption in global supply chain that took place at the end of 2021 then by the Russian-Ukrainian crisis. He added that the new budget will include an increase in fuel subsidy.
Prime Minister Moustafa Madbouli said the world is suffering from very serious challenges due to Russian-Ukrainian crisis.
Madbouli pointed out to unprecedented inflation waves facing the world today.
This is the highest inflation wave facing world countries in more than 50 years ever, added the premier.
He asserted the government is always keen on presenting the Egyptian state’s vision to handle this unprecedented crisis and pays a greater attention to supporting citizens.
Shifting to the increase in prices of petroleum products, especially diesel fuel, Madbouli said Egypt is importing refined petroleum products.
Egypt is producing and exporting part of petroleum products, but the country is also importing the larger part of its needs at a total of 100 million barrels annually, he further mentioned.
The price of the petroleum barrel was 60 dollars in the 2021/2022 budget, he said, adding that since the start of economic reforms and the application of automatic pricing mechanism and by the end of 2020 and the beginning of 2021 the government succeeded in cutting fuel subsidies with the exception of natural gas cylinders, that are still supported by the state.
He went on to say that by the end of 2020, the government removed fuel subsidies and was pricing all kinds of fuel, which means that the government prices diesel fuel at 6.75 EGP before price hikes, less than its real value.
When prices of all petroleum materials are collected, the value will be fully covered and the state did not endure any subsidies, at a time when the barrel is priced at 60 dollars.
He said the State was keen not to increase diesel price during the previous fiscal year.
Yesterday, Egypt raised the price for a liter of diesel from LE 6.75 to LE 7.25.
The premier noted that a liter of diesel actually cost 11 pounds which means that the State bears 4.24 pounds per liter, saying Egypt consumes 42 million liters of diesel daily, 1.25 billion liters monthly and 15 billion liters annually.
Over the past three months, the Egyptian State has borne 178 million pounds daily as a result of the difference between the diesel production cost and selling price, Madbouli said. If we kept the diesel price unchangeable, the State would have paid 63 billion pounds annually as a result, he noted.
The new increase will help alleviate burden on the State as it will decrease the subsidy paid by the State from 178 million pounds to 157 million pounds.
About the new budget, he said the State increased subsidy allocated for fuel due to the increase in prices, noting that 18 billion pounds were allocated for fuel subsidy in the previous fiscal year but now it rose to 30 billion pounds.
As a result of the Russian-Ukrainian war, Madbouli said the price of oil barrel increased to 120 dollars, doubling burden on the State budget.
He said the State was keen not to increase diesel price during the previous fiscal year.
Yesterday, Egypt raised the price for a liter of diesel from LE 6.75 to LE 7.25.
The premier noted that a liter of diesel actually cost 11 pounds which means that the State bears 4.24 pounds per liter, saying Egypt consumes 42 million liters of diesel daily, 1.25 billion liters monthly and 15 billion liters annually.
Over the past three months, the Egyptian State has borne 178 million pounds daily as a result of the difference between the diesel production cost and selling price, Madbouli said. If we kept the diesel price unchangeable, the State would have paid 63 billion pounds annually as a result, he noted.
The new increase will help alleviate burden on the State as it will decrease the subsidy paid by the State from 178 million pounds to 157 million pounds.
About the new budget, he said the State increased subsidy allocated for fuel due to the increase in prices, noting that 18 billion pounds were allocated for fuel subsidy in the previous fiscal year but now it rose to 30 billion pounds.
Prime Minister Moustafa Madbouli asserted the Egyptian state intends to re-plan the budget to contain the latest developments of current global crises.
All estimates reveal that the global bailout will take its toll for a year or more than, and thus it is necessary for the government to address this situation as a reality on the ground to endure great losses the state sustains, added Madbouli.
Diesel fuel is the most expensive petroleum product worldwide, however Egypt is one of the ten cheapest countries in the world in pricing diesel, he said, adding basic needs of citizens depend on diesel fuel.
Amid such tough conditions worldwide, the citizen should know that the State is not to blame and that it is working hard to protect limited income people through launching many initiatives to overcome this unprecedented period in the history of mankind and get out of the crisis with the least possible damage.
As for price of cooking gas cylinders, he said the price of the cylinder is linked to the price of fuel, saying it was sold for LE 65 at a time it cost the State LE 150 but now it will be sold for LE 75, up ten pounds from previous price.
About bread subsidy, Madbouli said Egypt consumes 270 million loaves daily, meaning 100 billion loaves annually, noting that one ton of wheat now cost 500 dollars.
Before the Russian-Ukrainian conflict, one loaf of bread cost the State 60 piasters but was sold to citizens for 5 piasters but after the crisis it cost the State 80 piasters but the State did not increase its selling price, meaning that the State bears an additional 20 billion pounds.
Madbouli said the State decided to postpone the increase in electricity price for six months to ease burden on citizens but this postponement will cost the State 10 billion pounds to be funded from reserves.
The prime minister also cast light on a decision taken earlier to increase salaries of public servants and pensions as of April 2022 instead of July 2022 to alleviate the burden on citizens.
He also referred to the increase in the number of beneficiaries of Takaful and Karama program by 450,000 families to hit 4.2 million families which cost the State budget 22 billion pounds.
He also reviewed measures taken by the government to improve the living conditions of Egyptians, including the allocation of 8 billion pounds to social housing and 11 billion pounds to health insurance.
Madbouli said Egypt is keen on having a strategic stock of all basic commodities within an average of six months, noting that the food subsidy increased to EGP 90 billion instead of EGP 87 billion.
The premier pointed to the government’s raising of the ardeb’s ton of wheat from EGP 710 to EGP 810 with incentives varying between EGP 65 to 70.
Egypt was working to collect between 5 and 5.5 million tonnes of wheat and succeeded to collect over 4 million tons (80% of the target), the prime minister said, pointing out the government will announce a new program for encouraging farmers to cultivate wheat with better mechanisms.
He also mentioned that the government continues to subsidy fertilizers, saying the current price of a ton of fertilizer is between EGP 4,000 to 5,000, while the global price is between EGP 11,000 to 12,000.
He referred to presidential directives to expand social protection networks.
He also pointed to an increase in the allocations of the health and education sector this year to reach EGP 310 billion and EGP 317 billion, respectively.
The prime minister said the president directed the government to appoint 150,0.00 teachers in the coming five years to fill the gap, adding the procedures of appointing the first 30,000 teachers have started.
Madbouli said Egypt is keen on increasing the income of the citizens, however, it does not have enough natural resources on which it could depend to increase its GDP.
Over the past five years, Egypt established more development projects to achieve a jump in the quality of life for the citizens, a matter which doubled the GDP, the premier noted.
The prime minister mentioned that the Egyptians’ income increased despite the overpopulation, a matter which shows the importance of increasing the development projects.
He also attributed the decline in the unemployment rate from 13.4% in 2014 to less than 7.5% now to the massive development projects.
He asserted the government’s keenness to enhance the industrial sector in the coming three years to increase exports.
Source: State Information Service Egypt