Egypt toys with idea of reducing energy subsidies

3 October 2012 – The Egyptian government is looking at cutting energy subsidies by US$4.2 billion. Arabic daily al-Masry al-Youm cited an unnamed official as saying the government has drafted a plan to reduce energy subsidies in the country. “Subsidies are not good for investor confidence and while it cannot be done at once, reducing them piece by piece would be a solid move for the country,” the official said.

The Central Agency for Public Mobilisation and Statistics (CAPMAS) says energy subsidies amount to some US$16.5 billion and represent about 20% of total government spending.In the new budget, the government will reduce the amount spent on fuel subsidies to US$11.5 billion from the previous US$15.5 billion, which will account for roughly half of all subsidies spent by the government.

Octane petrol, diesel and butane gas will all be distributed via a system of coupons and smart-cards in an attempt to keep a tighter rein on distribution and limit profiteering.

In March the government floated the idea of reducing subsidies, but until now, nothing of substance had been made public.