Egypt will totally cut the fuel subsidies during the upcoming year, Petroleum Minister Tarek el-Molla said.
Molla added in a press conference that the smart card system for fuel is cancelled as it causes insolvable problems; the card will provide two prices for the same commodity, and will lead to the return of monopoly.
He added that the plan to lift fuel subsidies passed through several stages until the real value of the product was reached and that the government is working to purify gasoline 80 to reach 87 within the modernization plan.
The minister pointed out that the subsidy of petroleum products in the upcoming budget of the fiscal year 2017/2018 recorded LE 89.1 billion, adding that fixing the prices would have raised the subsidy bill to LE 135 billion.
"Adjusting the prices of petroleum products is necessary because selling the commodity at a cheap price causes the state significant losses and abuses resources", he expained.
Molla revealed that his ministry is using an "automatic" pricing system for petroleum products, which works according to the international price of oil.
The Cabinet announced on Saturday, the second day of Eid Al-Fitr, the new fuel prices to decrease its subsidy gradually.
Gasoline 95 prices went up from LE 6.6 ($ 0.37) per liter to LE 7.7, while 92 octane gasoline prices amounted to LE 6.75 instead of LE 5 per liter. Prices of gasoline 80's liter increased to LE 5.5 instead of LE 3.65, the newly-appointed government said in its first move since taking oath Thursday.
The price of diesel will be LE 5.5 a liter instead of LE 3.65, while the price of natural gas used for vehicles rose to LE 2.75 per cubic meter instead of LE 2.
Meanwhile, the government has announced raising the price of the cooking gas cylinder to LE 50 instead of LE 30 and the commercial gas cylinder's prices surged to LE 100 instead of LE 60.
Egypt embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT), and cutting energy subsidies, with the aim of trimming the budget deficit.
The country has floated its currency in November 2016 before it clinched a $12 billion loan from the International Monetary Fund (IMF).
The IMF loan helped the state’s foreign reserves to rebound by receiving the first three tranches of the loan with a total value of $6.08 billion.
