Consumers suffer from scarce butane as black market prices soar

Mona Farag stood quietly watching military and police beat some of the women around her, forcing them, with the sides of their batons, to stay in place. It’s a familiar scene in Cairo these days, but Mona was not standing in an anti-government demonstration. She was simply making her twice-a-week trip to the Old Cairo propane tank depot to stock up on tanks she needs to keep her small coffee shop running.

“It’s always so chaotic here. I can never guess how long I’ll be standing. Last week I spent six hours in line waiting for my turn,” she said. In addition to the tanks she needs for her coffee shop, the 20 year old also exchanges empty tanks for home use.

While many middle- and upper-class households enjoy a direct flow of butane gas to their kitchens, much of the country relies on cylinders for their day-to-day cooking needs. During winter, use of cylinders extends to powering household heaters as well, increasing consumption.  Some areas of the country receive household deliveries. The service, provided by private individuals and businesses, saves many the burden of transporting the cylinders from local depots to their houses.

For months now, many branches of depots have closed their doors, and cylinders prices have increased. Egyptian papers have been inundated almost daily with news of the propane tank crisis, citing prices that at one point reached over LE50 for a cylinder replacement, up from the normal price of LE4-5.

News of injuries and deaths over the cylinders show that the crisis is real. But what is behind it may be more than just a simple matter of supply and demand.

Petroleum Minister Abdullah Ghorab told the People’s Assembly on Monday that the state spends LE20 billion annually to subsidize propane tanks. The actual cost of refilling a gas tank is LE55, but the Petroleum Ministry sells them to depots at LE2.50, which in turn are expected to sell the cylinders with a mark-up of no more than 10 piasters.

Egypt produces around 45 percent of the gas it consumes; the rest it imports. Around 12 million households rely on the cylinders, while only 650,000 receive direct lines to their households.

“Since the revolution, our supply of butane tanks based on estimates from governorates has been 100 percent. The problem is distribution,” Ghorab said.

Many cylinders meant for home use are instead appropriated by industries, and the private depots, which represent 90 percent of distribution, make tiny profits from each legitimate sale, so they try to make more through the black market, Ghorab said.

“The government has sufficiently financed gas tanks, but unfortunately with the increase of prices on the black market, normal citizens are not benefitting from these subsidies,” he added.

Minister of Supply and Social Affairs Gouda Abdel Khaleq has publicly stated on more than one occasion that the main problem is oversight.

According to those involved in the distribution of the butane tanks, restricted access to depots around the country and organized crime on the private end of the business have created the current crisis.

“The problem is security. Much of the supply is there, but thugs and individual vendors are taking advantage of the security vacuum to steal cylinders or hoard them to raise black market prices,” said Ramy Adel, who is in charge of a local Freedom and Justice Party social services office in Old Cairo.

The Old Cairo depot once sent cylinders to tens of branches to western Cairo. Now residents must make the choice of spending their days waiting in line and possibly getting beaten up, or paying up to 1,000 percent more to buy tank refills off black market dealers in their neighborhoods (which in some cases, means right in front of a local depot).

Mohamed Reda, a retired journalist, tied his full tank on the back of his motorcycle to take home after paying one of the tank peddlers LE30 to bring him a tank.

“I bought my dignity with these LE30,” he said.

In line, Reda may be subject to all kinds of harassment from butane tank thugs who try and force the black market wares on needy customers. “These thugs crowd the lines and can cause fights, which in turn cause police or military police to try and impose order by beating anyone in sight. I’m too old for this nonsense,” he said.

Still, Reda waited for two hours, making use of the informal market in plain sight of more than one high-ranking police officer.

“They’re in on it! Look at them, they don’t care,” he said as some officers stood about five meters from black market tank peddlers. This would be the last time Reda would go to the depot for a tank.

“I’d rather pay the extra LE20 to buy from a traveling tank salesman than subject myself to this,” he said.

On the other side of the depot’s chaotic entrance, butane tank peddlers have special access to their own tank allotments and move in and out with relative ease while families toil to get their rightful share at the main entrance.

On the side of the road, groups of informal tank sellers complain that the current crisis opened the door for a new breed of tank dealers to enter the market, as distributors and depot branches have closed.

Selling gas canisters on the black market has long been tolerated and informally regulated. But recently, things have changed.

“Before it was known who would get to receive portions from this depot to distribute. It was still an informal system, but an agreed-upon one, and it kept people like me from resorting to crime or violence,” said black-market tank seller Mahmoud Hamed, a 32-year-old father of three. Now, Hamed says, violence is the only way a black-market dealer gains access to tanks.

Despite statements from the Ministry of Supply and Social Affairs that they would increase supplies, one depot employee, who chose to remain anonymous, said that the depot is receiving the same number of tanks it used to get before the crisis and that increased supply is normal for the winter.

“We are still getting a steady stream of supplies, but the problem is distribution,” the depot employee said. Within a four hour visit to the depot, Egypt Independent saw four trucks full of tanks arriving, each carrying between 700 and 750 tanks. Before transporting each crate of tanks, some unidentified young men would carry dozens away to sell elsewhere.

“If the truck drivers don’t allow this, drivers and depot employees are usually threatened with guns or knives,” said Hamed, who also confessed to occasionally showing force to ensure his share.

The Ministry of Supply and Social Affairs has repeatedly announced that it would begin distributing tanks based on a coupon system in which every family is responsible for receiving their ration. This system has not yet been activated. Authorities began distributing 500,000 coupons in December 2011 according to the ministry; however the coupons were nowhere to be seen in Old Cairo.

Reports of violence due to the tank crisis continue, especially in Upper Egypt, where Luxor and Qena Governorates have both reported elevated levels of butane tank-related violence.

Qena Governor Adel Labeeb blamed the smaller depots for the crisis, claiming that they are involved in hoarding and price gouging. However the Youth Coalition in Luxor, a revolutionary group, blamed the governorate’s security chief for allowing black market practices to dictate prices.

Some in Upper Egypt have given up hope on prices going back to their original, affordable prices.

“We have built a stove oven last September, and have been using it,” said Kamel Fawzy, a farmer in Sohag’s rural Sawam’ah neighborhood.

Fawzy however, has an option that most of Egypt’s urban residents do not — space and time to use stove ovens.

As with many of Egypt’s economic problems, numerous analysts and businesspeople suggest that the solution will come with improved security.

Until then, people like Farag will continue risking their bodies on a regular basis for cooking fuel.

“I am able to come to the depot and stand in line for however many hours is needed,” Farag said. “What about the older people who aren’t able to work and are not able to come to the depot? Will they keep paying LE40 and LE50 only to be able to cook or keep themselves warm? I don’t think it can continue like this.”

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