The government will not increase domestic petroleum prices in fiscal year (FY) 2015/2016 due to a decrease in prices of Brent crude oil on the global markets.
There are expectations that its prices will continue to range between $70-$80 per barrel for the next two years.
Petroleum Minister Sherif Ismail told Daily News Egypt the government will not raise domestic fuel prices in FY 2015/2016, as it is not suitable for the situation in Egypt.
He added that the liberalisation plan for fuel prices set by the government remains the same, and will not necessarily change. It is expected to be implemented over five years, with work on it having started in the current fiscal year.
The Egyptian government raised fuel prices by 75% last July as part of the Egyptian economy’s reform project, Ismail said.
He added that the economic situation of the Egyptian citizen does not allow any price changes during FY 2015/2016. The decrease in Brent prices will contribute to a decline in the fuel subsidy bill, with a stability of prices in local markets.
He noted that the fuel subsidy bill for FY2014/2015 has decreased to EGP 80bn, instead of EGP 100bn, due to the Brent price decrease.
Ismail said the government has cut fuel subsidy perquisites in the FY2014/2015 budget to EGP 100bn, instead of EGP 140bn in FY2013/2014.
The expected Petroleum material subsidy in FY2015/2016 is estimated at EGP 86bn, with $75 per oil barrel, according to Ismail.
The government estimated a single barrel’s price at $105 in the budget of FY2014/2015; however, oil prices have fallen dramatically over the past few months due to an oversupply in markets. There has also been an increase in the production of shale oil and the efforts of the Organization of Petroleum Exporting Countries (OPEC) to face this trend by reducing prices.