The fuel bill keeps going up: The fuel pricing committee has decided to hike fuel prices by 8-17% as of last Friday, according to an Oil Ministry statement.

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Here's a breakdown of the new prices:

  • 95-Octane is now EGP 17.0 per liter, up 13.3% from EGP 15.0;
  • 92-Octane is now EGP 15.25 per liter, up 10.9% from EGP 13.75;
  • 80-Octane is now EGP 13.75 per liter, up 12.2% from EGP 12.25;
  • Diesel prices rose to EGP 13.50 per liter, up 17.4% from EGP 11.50;
  • The price of kerosene oil also rose to EGP 13.50 per liter, up 17.4% from EGP 11.50.
  • The price of compressed natural gas for automobiles rose to EGP 7.0 per cubic meter, up 7.7% from EGP 6.50 previously — a price that has been fixed since March.

Industrial mazut prices also got a bump: The price of mazut for most industries increased to EGP 9.5k per ton, up 11.8% from EGP 8.5k previously. The government has kept mazut prices stable for electricity generation and food industries, according to the statement.

This marks the third fuel price hike in 2024: The move comes just three months after thelast price hike in July, which saw petrol prices increase 10-11% and diesel prices rise by 15%. Petrol prices have risen by 33-38% year to date, while diesel prices have jumped by 63.6% since the beginning of 2024.

The decision is set to save the state a whole lot of money: The new fuel prices cover 85% of petrol costs and 69% of diesel costs, a government source told EnterpriseAM, adding that the latest increase will save the state coffers some EGP 10 bn during the next quarter.

But the state’s fuel subsidy bill is still pretty hefty: The government is still subsidizing diesel purchases by EGP 8 bn per month and petrol purchases by EGP 1.8 bn per month, our source added.

The government’s target date to end fuel subsidies is fast approaching: Successive hikes have been widely expected since Prime Minister Moustafa Madbouly signaled in May that the state is looking to gradually “restore balance” between fuel cost and its end price by the close of 2025. Despite Madbouly noting that this target would not include diesel, it has seen the highest rate of increase among petroleum products since the beginning of this year.

Fuel prices are set to remain as they are for at least six months: The fuel pricing committee will skip the next quarter and meet again in six months to review fuel prices, the Oil Ministry said in the statement. The committee has recently shifted its pricing mechanism from the so-called “automatic pricing mechanism” implemented in 2019, to a cost recovery mechanism, another government source told EnterpriseAM. The previous mechanism linked fuel price changes to global oil prices and FX rates, while limiting potential adjustments to ±10% per revision.

The state’s desire to keep inflation in check is behind the pause: The six-month pause to fuel price hikes aims to stabilize prices and reduce inflation in the coming period, Madbouly said in televised statements yesterday. Energy costs — a substantial part of which is accounted for by fuel prices — have been acknowledged as driving two consecutive monthly upticks in inflation.

Between a rock and a hard place: Good news for the public purse doesn’t necessarily mean good news for the state in its fight against inflation. While Egypt is determined to tame its hefty fuel import bill — especially with concerns a regional war could cause energy import prices to spiral — and meet its obligations with the IMF to gradually lift fuel subsidies, passing the tab onto the consumer means adding sizable inflationary pressures to the mix as Egypt tries to get inflation in the single digits by next year.

Some sort of state intervention is set to continue post-price parity Madbouly pointed to the state’s desire to shield low-income households and the middle class from rising prices more generally, adding that support measures will “continue to exist even after reaching the equilibrium point.” Madbouly did not specify what he was referring to, but his government is planning to start the move to cash-based subsidies in the next fiscal year.

THE AFTERMATH-

Users of public transport in the capital are also going to feel the pinch, with fare hikes announced by Cairo Governorate :

  • Public bus fares rose to EGP 9 up from EGP 8 for regular buses and EGP 17 up from EGP 15 for air-conditioned vehicles,
  • White taxi meters in Cairo will now start at EGP 10.5, up from EGP 9.5 and rising to EGP 2 per km.
  • Minibus travel in Cairo will now cost EGP 14 up from EGP 12, and EGP 17 up from EGP 15 for air-conditioned vehicles.

And that’s not all: Elevated diesel prices will add an additional EGP 100 mn to the monthly operating cost of Egypt’s railways, unnamed government sources told Asharq Business, adding that while there are no plans to raise ticket prices during the current fiscal year, prices may undergo a review next fiscal year.

Domestic shipping prices are also expected to rise by 10-15% on the back of the fuel price hikes, Al Mal quoted Abdel Aal Ali, advisor to the Egyptian International Freight Forwarding Association, as saying — he pointed to shipping between ports and industrial zones, farms, or warehouses.

The price of gas supplied to power plants will also go up to USD 4 per 1 mn BTUs, up from USD 3, Electricity Minister Mahmoud Esmat said during a presser yesterday.

Higher transport costs will mean costlier trips to the supermarket: HC Brokerage’s Equity Research Head Nemat Choucri told EnterpriseAM that these increases would be reflected in Egyptians’ grocery shopping trips, describing how higher diesel prices would translate into higher food transportation costs, and subsequently higher food and beverage prices. The elevated price of mazut will burden the industrial sector with higher production costs, especially following the recent electricity price hikes.

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