A paralysed city: The diesel fuel crisis

The fuel crisis in Egypt has been recurring since the 25 January Revolution: in May and June 2011, March and September 2012, and now in recent months. Diesel supplies have been at their lowest levels yet, impacting huge sectors of the country’s economy.

In response, waves of anger have spread across Egypt’s governorates, materialising in Giza on Sunday in the form of a strike organised by microbus drivers, some of the biggest consumers of diesel fuel.

On Sunday the Ring Road, the vital circular highway surrounding Greater Cairo, was clogged with standstill traffic because of the strike. This also prevented passengers from commuting throughout the city due to the lack of microbuses on the roads.

 

The crux of the crisis

Mao’af Al-Bahr Al-Azam has been one of the primary stations involved in the strike due to its proximity to the Ring Road. It is an archetype microbus station, packed with microbuses, outdated seven-seater cars and taxis and surrounded by tea and coffee stalls and newspaper kiosks.

Usually the station is full of commotion; drivers washing their vehicles, waiting for passengers to jump in, occasionally fighting with other drivers over passengers or a parking spot. During the strike it is strange to find the station nearly desolate.

A group of drivers are seated next to their parked microbuses sipping tea and chatting. The oldest among them is Hag Mohamed. He goes on daily trips from Giza to Suez and back. He struggled to find diesel fuel the last three days in both governorates. Telling his despairing story attracted drivers around him, prompting them to come closer to listen.

“No diesel fuel in Giza or Suez and when there is, I queue up at the gas station all day, but I don’t even get to fuel my vehicle because by the time my turn comes, the station runs out of diesel or [gas station attendants] tell me that electricity is out [stopping the fuel pump from working],” he desperately recounts his experiences.

The price of diesel fuel per litre is EGP 1.10, but Hag Mohamed and his fellow drivers usually pay about EGP 65 to get 40 litres (adding a gratuity to the gas station attendant as a way to guarantee he will fuel his vehicle). On the black market it is possible to get 20 litres for EGP 40.

Some drivers earn a bit over EGP 250 driving from one city to another, but about one fourth of that amount goes to buying diesel while the rest goes on other expenditures. With diesel becoming ever more scarce, they do not work as often, and if they did, they cannot charge the passenger more to make up for their financial loss from the crisis.

“We do not raise our ticket prices because if we did we will lose passengers. Some of us raised their prices one pound extra and this caused passengers to quarrel with the driver because they are used to getting to their destination with a certain price,” Hag Mohamed explains.

Each microbus driver takes eight-hour shifts, so it becomes frustrating to stand in queues for four hours that eat up half the day’s work. Not only is it a financial loss, but also the driver consumes time and energy. “The waiting takes away our patience and the smallest mistakes infuriate us; that’s why quarrels and even knife fights happen in some queues…A man was killed in a fight before,” Hag Mohamed says frustrated.

Hag Mohamed is not the only overburdened driver. Other drivers who ply the route from Cairo to Fayoum experience similar problems at Fayoum gas stations. One driver had enough fuel to get to Fayoum, but could not return. Another had to sleep overnight in his microbus to stay in the queue.

With all these pressures, this crisis seems to be the straw that broke the camel’s back. A younger driver says: “That’s why we held a strike in the Ring Road…we wanted to deliver a message that if we cannot find diesel, the country would come to a halt.”

During the strike, a police general visited the station. Hag Mohamed and the drivers spoke to him about their demands to make diesel accessible so that they could return to work. “At the end of the conversation he said ‘Didn’t you choose [President Mohamed] Morsi? Then let him fix it. I’m on vacation these four years.’ I swear to you these were his words that left us clueless,” Hag Mohamed recalls.

 

Ramifications

Millions around Egypt commute by microbus because they are cheap, fast and available from anywhere to everywhere. Hag Mohamed says microbuses are the backbone of Egypt. “We drive students to their schools, employees to their workplace, and travellers in and out of cities. Many people are affected by our crisis and they can’t run their errands without hailing a microbus,” he comments.

Trucks of all sizes are impacted as well and the same goes for larger buses. Even private buses for schools and universities run on diesel. As a result, the transportation sector is the first to feel the effects of the crisis.

However, the scarcity of diesel fuel is not only affecting transportation, it is impacting other services such as the operation of mobile towers. And now, the crisis is slowly expanding to Egypt’s agricultural and industrial sectors.

Factories in need of imported raw materials would be facing an increase in transportation costs from ports and to distribution centres and warehouses.

Electricity companies operate their generators on diesel fuel and any shortage would lead to starting another crisis in electricity flow similar to the crisis of last year.

The upcoming wheat-harvesting season requires the use of tractors, ploughing and other agricultural machines that run off diesel, consequently raising fuel demand. According to several news reports, the demand has already begun to rise because farmers have been storing up diesel in preparation for the harvest season.

Ordinary people who do not necessarily commute were also affected. According to state-run Al-Ahram, the past week witnessed an increase in fruit and vegetable prices in Cairo and Giza markets. The prices rose around 50% in the last three days as a coinciding response to the pinnacle of the crisis. The increase correlated with the cost of trucks transferring produce to the markets.

 

A responsibility vacuum

Hag Mohamed attributes the problem to corrupt gas station managers who sell diesel and gas to the black market and the unresponsive police who allow this to happen without doing anything about it. “I blame the gas station owners who prefer to sell gas to the black market to put extra cash in their pockets. But whose job is it to stop this smuggling?  Why are the police not monitoring this? Even if they don’t like the president, this is their role. They know everything, yet they do nothing,” he says angrily.

Am Adel is an attendant at Misr, a state-owned gas station located in Al-Bahr Al-Azam Street. He supervises the delivery account at the diesel station, saying that they get from 20,000 to 40,000 litres of diesel fuel per day, which is less than the 50,000 litres per day he estimates they need to satisfy demand. He blames the problem on the government, tank truck smuggling and people buying and hording fuel in case prices soar up.

“The problem is that tank trucks pour out some their load and sell it before arriving at the station and when we find out, we complain to the Ministry of Supplies’ supervisor at the fuel warehouse, but nothing changes,” he explains.

Am Adel adds that “the crisis only happens when there is a delay, but as you can see today the situation is better”. Diesel fuel was available at a number of gas stations from early morning. This happened after the government responded to the crisis by pumping an extra one million litres of diesel fuel into the market.

A truck driver at Misr says: “If the problem is smuggling or the gas station owners, why is diesel fuel available only after the strike in the past two days? Did it magically survive all the hardships the government has been circulating on TV and in newspapers? I think they [the government] are the problem. They are inefficient and they need to attend to our needs. They have to increase the amounts they give to gas stations.”

Egypt imports 40% of its diesel consumption, and produces the rest. The daily quota for the 24,000 gas stations located in Egypt’s governorates is 35,000 tonnes. Some experts accused the Ministry of Supply for not covering the required consumption that could reach up to 38,000 tonnes, saying the quota should be increased to 40,000 tonnes.

This increase is supported by Hossam Arafat, the chairman of the division for petroleum products at the Federation of Egyptian Chambers of Commerce. Arafat blames the crisis on mismanagement by the government. He accuses the government of not providing the necessary monetary resources to pay for diesel shipments, connecting the diesel crisis to that of the rising price of the US dollar.

Arafat’s accusations seem to be supported by the facts, since the representatives from the Petroleum and Finance ministries declared last February that EGP 50bn allocated for energy subsidies have been depleted. The two ministries have held several meetings to come up with new resources for the subsidies budget for the second half of the 2012/2013 fiscal year.

Nevertheless, the government has not said much about this problem since the current fuel crisis peaked. On the contrary, Minister of Petroleum and Mineral Resources Osama Kamal indicated indirectly that money is not the issue, stating that the ministry spends more than $35m to meet daily diesel quotas, and is doing the best it can to make the fuel available to Egyptians.

Kamal blamed the crisis on a lack of security and absence of monitoring institutions, which gives way to black market traders. “The ministry’s monitoring alone is not enough; a strong police apparatus is needed,” read the minister’s statement.

Arafat thinks that the government’s allegations of smuggling show more weakness and inefficiency than anything else. He warns that the crisis will exacerbate if a solution were not to be found, especially with the upcoming harvesting season and the Coptic feasts.

The statements of the Ministry of Petroleum and Mineral Resources, the Ministry of Supplies, owners and employees of gas stations; each side blames the problem on another, leaving a vacuum of responsibility.

 

A way out?

Hag Mohamed believes in only one solution: “If they provide gas stations with more fuel and supervise the process to ensure smuggling does not happen. The police need to work and there should be stricter policies against smugglers. This country needs law to be enforced,” he continues. “Enforcement is always our biggest problem.”

Other drivers demanded that President Morsi intervene, saying nothing gets solved in Egypt unless people protest and are heard by the president. Only then will something be done.

The government came up with a quick remedial solution to handle the crisis for this week by pumping an extra one million tonnes of diesel fuel. Additionally, as a way to appease the public, Minister of Petroleum and Mineral Resources Kamal made an internal reshuffle at Egyptian General Petroleum Corporation yesterday, sacking the state company’s president.

Arafat and other stakeholders held a meeting at Egypt’s Chamber of Commerce and have raised their demands on how to handle the crisis to the government. Among those demands was a proposal to approve an additional budget outside the main budget to import extra amounts of diesel fuel.

This is a similar solution the government came up with in September of last year when a related crisis occurred. This procedure should help in providing a stock for the upcoming three month until the country is able to hold parliamentary elections. After the elections the House of Representatives would make a new budget and come up with new system and policies to handle the issue of subsidies.

 

Some names have been changed to protect their identity