Gov’t could raise fuel prices next month

Fuel bills could go up again next month: The government is expected to raise fuel prices in April as it works to phase out fuel subsidies, a government source told EnterpriseAM. The anticipated move is part of the government’s plan to have energy prices reach cost recovery levels by the end of the year. The fuel pricing committee last raised fuel prices in October, bumping up bills by 8-17% in what was the third and final fuel hike of 2024.

The game plan: The committee is expected to raise prices by EGP 1-1.25 to narrow the gap between selling prices and production costs, our source said. The current costs per liter stand at EGP 21-22 for 92-Octane fuel and around EGP 23 for 95-Octane, our source added. That’s compared to their current selling prices of EGP 15.25 and EGP 17.0 per liter, respectively.

More hikes to follow: The committee is expected to implement a price hike at each upcoming meeting this year, our source said.

Staying the course: The government is set to press ahead with the planned hikes despite global oil prices standing at a lower level than what the current state budget pencils in, our source said. The fuel pricing committee is conducting an ongoing evaluation of prices based on global oil forecasts, exchange rates, and other variables.

Diesel and butane gas cylinders to remain subsidized: Diesel is set to continue to be sold at a subsidized price, while butane gas cylinders will also continue to receive a significant subsidy, Prime Minister Moustafa Madbouly said in last week’s presser. Subsidies for diesel and gas cylinders will be covered through revenues from other petroleum products, cabinet spokesperson Mohamed El Homsani said last week, adding that selling diesel at its actual cost is not feasible due to its impact on citizens, especially low-income groups.

Until then, the government plans on extending its oil hedging strategy to hedge against any potential increase in oil prices or price shocks, the source told us. The government also plans to accelerate investment in the domestic oil sector to achieve self-sufficiency and possibly pave the way for exports, which would help balance Egypt’s overall fuel consumption bill.

The gov’t previously planned on extending the timeline of implementing the fuel hikes past 2025: The government held talks with the IMF back in December about postponing a fuel hike planned for December of last year to early this month and postponing a subsequent hike in June to September, followed by quarterly hikes. This would effectively push the timeline for fully eliminating fuel subsidies to June 2026, rather than December 2025, our source said at the time, noting that such a decision would likely help bring down inflation in the interim.

It’s not just fuel prices that are set for an increase: Electricity prices hikes for both residential and industrial sectors are set to take effect by July, another government source told EnterpriseAM, without disclosing the expected price increase. The government will continue to provide support for lower-consumption households, alongside carrying out efforts to regulate consumption through expanded control centers and prepaid meters, the source said.

REMEMBER- The Electricity Ministry last hiked electricity prices for households, businesses, and the public sector in September of last year. Prices rose 14-40% across the board, with the sharpest increases faced by households with the heaviest consumption.