Egypt announces fuel price hikes

Egypt's government announced new fuel prices for many sectors of the economy on Tuesday, which industry sources said were 50 percent higher than previous levels, triggering protests by factory owners affected by the increase.

Several hundred people employed in the brick manufacturing industry — one of the sectors affected — blocked roads in Cairo and Minya, south of the capital, to protest at the price rises, an unnamed security source said.

With the economy in crisis, the Egyptian government is under pressure to rein in a deficit enlarged by energy subsidies that account for a fifth of the budget. The government must curb the subsidies to secure a vital US$4.8 billion International Monetary Fund loan, economists say.

The government said the price of fuel oil, which is widely used in energy-intensive local industries, would be LE1,500 per ton.

This would apply to industries, with the exception of bakeries, electricity producers and food manufacturers to be named by the ministry of industry.

Tuesday's government announcement gave no comparative figure or timeframe for when the new prices would come into effect, but industry sources said they had been raised from LE1,000 previously.

Prices of locally-produced natural gas, fuel oil and diesel for manufacturers of cement and bricks were also raised by 50 percent, the industry sources said.

As part of moves to cut subsidy spending, the government plans to start rationing subsidized gasoline through a system of smart cards at the beginning of July, the minister of petroleum said on Monday.

The final ratification of the IMF loan was postponed in December at Egypt's behest because of political unrest.

Since then, the country's reserves of foreign exchange have fallen to $13.6 billion, below the $15 billion level required to cover three months of imports, and the currency has fallen by 8 percent against the US dollar to a record low. 

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