A Ministry of Tourism official predicts a 100% price rise for cruise services due to the diesel price hike, raised Friday night from EGP 1.10 to EGP 1.8 per litre.
The official, who works in the ministry’s hotels sector, said a majority of cruises have not coordinated with foreign tourism companies on raising their prices.
He said that cruises will be most affected by the rise in fuel prices, especially this season. No prior warning was given to the tourism sector that the price on diesel fuel would be raised.
The cabinet raised the price of petroleum derivatives yesterday to EGP 6.25 for 95 octane gasoline, EGP 2.6 for 92 octane gasoline, and EGP 1.8 for diesel and kerosene.
According to the Egyptian General Petroleum Corporation (EGPC), the tourism industry receives EGP 12.5bn in annual diesel subsidies.
The tourism industry consumes 22% of total diesel output in Egypt, amounting to 12.4m tonnes per year, according to a study by the Federation of Egyptian Industries.
The official said: “There has to be immediate coordination with the Ministry of Petroleum in regards to supplying gas to these cruises so as to prevent further losses in the tourism industry which has seen bad conditions over the last three years.”
There has been a sharp decline in tourism income over the past year to $ 5.9bn, down 41% compared to profits in 2012.
The Ministry of Finance has allocated EGP 2bn to the Ministry of Tourism to deal with the effects of removing subsidies on diesel fuel for the tourism sector. The fuel used in this sector is now being replaced with natural gas and renewable energy, according to previous press statements by Minister of Tourism Hisham Zaazou.
“There are more than 24,000 vehicles serving the tourist sector that use diesel and gas, so we will ask the government to build the infrastructure and natural gas stations to deliver gas to the Red Sea area, the Cairo-Alexandria Road, and Sharm Al-Sheikh,” stated the official.
However, Abdul Rahman Anwar, Vice-Chairman of the Cruise Investors Association, claimed that prices on cruises will rise to more than 60% due to the price hike in diesel.
Anwar said cruises have been the hardest hit since the outbreak of the 25 January Revolution. According to him, only 15 cruises run with an average occupancy of 30% out of a total of 286 cruises operating on the stretch of the Nile between Luxor and Aswan. According to the Chamber of Egyptian Hotels, these cruises have a total of 17,000 rooms.
“The rise in diesel prices will not be the last for the tourism industry, due to agreements that have taken place between the Ministry of Petroleum and the Ministry of Finance in the past two years,” said the official from the Ministry of Tourism. “We expect another price hike in diesel prices, which would raise the price of one litre of diesel to more than EGP 5.”
Anwar said the government should gradually raise the price of gas during the next three to five years at the very least, to avoid pushing the tourism sector into difficult circumstances.