Gas campaign highlights losses in Petroleum Ministry budget

Abdel-Rahman Hussein
5 Min Read

CAIRO: The popular campaign to stop the export of Egyptian gas said that the Ministry of Petroleum’s budget for 2009 saw losses run into the billions of pounds.

The campaign, which obtained a copy of the budget that the ministry sent to the Central Auditing Authority, cited that the deficit amounted to LE 49 billion. The campaign intends to submit the budget to the Supreme Administrative Court, which is currently hearing a case regarding the export of gas to Israel at reduced prices.

The campaign’s petroleum expert Ibrahim Zahran told Daily News Egypt that the ministry accounted for the deficit with the LE 71 billion it pays in subsidies for oil and gas products, but Zahran pointed out that the greater part of the subsidy was not for internal consumption.

“Subsidies for internal consumption of oil and gas totaled LE 12 billion five years ago, so how much could they be now? If you are a private investor exporting gas abroad you should be buying them for subsidized prices, he said, “but most of the subsidy goes either to investors who export gas or gas products abroad at great profit or to countries like Israel and Spain which we sell gas to at reduced prices.

“And that’s how you reach the number of LE 71 billion, he added, “So the subsidy goes to countries like Israel and the rest to private investors, not the Egyptian people.

Another member of the campaign, Abdallah Helmy told Daily News Egypt, “Is there a clear reason for this deficit? Only if there is corruption. There is commercial profit for those involved in these deals but the country is losing.

Besides the case currently being heard by the Supreme Administrative Court, the members of the campaign also wanted to conduct a public mock trial for the export of gas at reduced prices at the Lawyers’ Syndicate, but were unable to enter in their second attempt to hold it last Tuesday.

“We had written permission from the head of the syndicate, and in attendance were members of the syndicate board of directors, and yet they closed it, Helmy said.

The Supreme Administrative Court scheduled the next hearing of the case for Nov. 7. In the final stage of the court process that saw the administrative court issue a ruling to ban gas exports to Israel in November 2008 that was later overturned by the Inspection Cassation Circuit.

The campaign has brought the matter to court, spearheaded by former diplomat Ibrahim Yousri.

Yousri told Daily News Egypt earlier this week, “We have court decisions in our favor and the government doesn’t enforce them. I hope that they do so this time if the ruling is in our favor.

The gas deals with Israel have been met with vehement local opposition, especially because of the initially favorable price. The Ministry of Petroleum sells the gas to the Eastern Mediterranean Group (EMG), which then sells the gas to Israel.

The initial gas deal came about after a Memorandum of Understanding was signed between Egypt and Israel in 2005. The contract was initially for 15 years guaranteeing a supply of 1.7 billion cubic meters a year at the price of $1.5 per million BTU (British Thermal Units).

In July a new gas deal was announced between EMG and the Israeli company Dorad Energy subject to an agreement that was initially struck in 2007. The terms of the new deal were that EMG would supply around 12.5-16 billion cubic meters of gas to Dorad Energy over a period of 17- 2 years at a cost of $2.1-3.3 billion, or around $4.5 per million BTU.

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