Egypt’s fuel price indexation committee reduced petrol prices by about 3%, in line with the global decline in oil prices, while diesel prices stabilised. It was also decided to amend the price of mazut to be EGP 3,900 per tonne.
The committee wanted to reduce petrol prices by 10% in the first place, but the current unfavourable conditions due to the coronavirus have forced the committee to limit the price decline to 3%, an oil sector source told Daily News Egypt.
Petrol prices came as follows: octane-95 was reduced to EGP 8.50 per litre, octane-92 to EGP 7.50 per litre, and octane-80 to EGP 6.25 per litre.
The source said Egypt is currently directing roughly $5bn of its foreign exchange reserves to importing commodities and disease control equipment. Put together, these two elements have prevented a further fuel price reduction.
He pointed out that the Ministry of Petroleum imports about 50% of the local market’s diesel and liquefied petroleum gas (LPG) needs, while 25% of the country’s petrol consumption is imported.
He added that the Egyptian government succeeded in exploiting the global decline in oil prices by importing 10m barrels of crude oil. The move was to create strategic stocks sufficient to meet the market needs for more than 15 days, besides local production, which saves the state budget a lot of money.
The committee reviewed the global crude prices and exchange rate averages for the period between January and March 2020 compared to the period from October to December 2019. It took into account that the price equation requires adjusting prices up and down at a maximum of 10%.
In light of the unprecedented current circumstances experienced by the global oil markets and the economic fallout due to the ongoing coronavirus outbreak, part of the savings from the cost reduction will be spared. The funds will be used to face the increasing burden due to the consequences of the coronavirus.