Egypt’s natural gas prices rise despite major discoveries

Consumers purchase fuel at a petrol station in Egypt. (REUTERS)
Updated 25 July 2018

Egypt’s natural gas prices rise despite major discoveries

CAIRO: The price of natural gas in Egypt is expected to rise by 75 percent in August. Natural gas and cylinders filled with liquefied petroleum gas (LPG), mainly used for cooking and heating water, are the main source of fuel for more than 75 percent of Egyptian households.
The Egyptian Cabinet took the decision this week to elevate the price for gas consumption of up to 30 cubic meters to 1.75 Egyptian pounds, up from 1 pound per cubic meter, representing a 75 percent increase.
Gas consumption between 30-60 cubic meters went up by 42.8 percent, from 1.75 Egyptian pounds to 2.50 pounds per cubic meter. Consumption of more than 60 cubic meters rose by 33.3 percent, from 2.25 pounds to 3 pounds per cubic meter.
The price of cooking cylinders, which represents a costly item on households budget for the poor, rose from 30 pounds to 50 pounds and commercial gas cylinders surged from 60 to 100 pounds.
“I really don’t know what to do now. Our lives are now moving by the grace of God. It became tough to find a job. Cylinders are now sold in Fayoum for 75 pounds, ” Hashem Mohamed, a cylinder distributor in Fayoum, told Arab News. Hashem relies on the distribution of cylinders as an extra source of income to support his family of six.
“The cylinder used to be 4 pounds during the Mubarak era and then after the revolution, it reached 11 pounds. Now it has become 50 pounds and there are clear indications that it will end at 85 pounds next month,” said Omar Youssef, a 35-year-old resident of Cairo.
Another wave of price rises is expected to hit Egyptians hard as part of the painful austerity measures the government has been applying within its economic reforms to service the country’s ailing economy.
The new price list is despite recent major natural gas discoveries. There have been two big natural gas discoveries at Noor, off the coast of North Sinai, dubbed by the Egyptian government as the largest in the region and at the Zohr field, discovered in 2015.
These discoveries, among others, are expected to change the country from a net importer to a net exporter of gas by next year.
“We heard news of the great discoveries and sufficient production by the end of 2018, which is really great. Why are the prices of natural gas rising now then? We should be expecting another chain-effect with prices growing on all products again,” Dr. Badr Abdallah, a consultant at the University of Assiut, told Arab News.
Earlier in June, the Egyptian authorities announced the new fuel prices as part of its plan to lift subsidies. There was a 34 percent increase in the price of octane gasoline, 92 octane gasoline increased from 5 pounds to 6.75 pounds (from $0.28 to $0.38) per liter and 80 octane gas increased from 3.65 to 5.5 pounds (from $0.20 to $0.31). There was a 17.5 percent increase in 95 octane gasoline, which increased from 6.6 pounds to 7.75 pounds (from $0.37 to $0.43)
Authorities have also increased the price of drinking water by up to 45 percent, electricity by 26 percent, and raised metro fares 250 percent in May. The metro fare price rise was met with some protests.
Following the 2011 uprising that toppled former President Hosni Mubarak, the economy of Egypt has been struggling. Egypt’s President Abdel-Fattah El-Sisi declared that Egypt’s spending to cover fuel, food and electricity is measured at $18.6 billion a year and plans to slash these figures. While the minimum salary has stayed the same during the last four years, the price of diesel has increased fivefold, cooking gas rose by 16 fold and 92 octane gasoline by 360 percent.
In 2016, Egypt secured a three-year $12 billion bailout loan from the International Monetary Fund by agreeing to austerity measures that included currency floatation, cutting subsidies and raising the value-added tax.
The current fiscal year 2017/18 looks promising according to the government’s optimistic view on the economy, targeting a 5.8 percent growth rate compared to the current 5.2 percent, as well as lowering the budget deficit from 10.9 percent in the fiscal year 2016/17 to 8.4 percent.


IMF experts visit Lebanon amid worsening economic crisis

Updated 20 February 2020

IMF experts visit Lebanon amid worsening economic crisis

  • IMF team will provide broad technical advice
  • Lebanon has not requested IMF financial assistance

BEIRUT: A team of IMF experts met Prime Minister Hassan Diab on Thursday at the start of a visit to provide Lebanon with advice on tackling a deepening financial and economic crisis, an official Lebanese source said.

The IMF has said the team will visit until Feb. 23 and provide broad technical advice. Lebanon has not requested financial assistance from the Fund.

The long-brewing economic crisis spiraled last year as capital flows into the country slowed and protests erupted against the ruling elite over decades of corruption and bad governance.

Diab’s government, which took office last month, must decide what to do about upcoming debt payments, notably a $1.2 billion dollar-denominated sovereign bond due on March 9.

Lebanese President Michel Aoun meanwhile said on Thursday measures would be taken to hold to account all those who contributed to Lebanon’s financial crisis through illegal actions be they transfers abroad, manipulation of Eurobonds or other acts.

“There is information that we are still in need of with regards to the banking situation. There are measures that we will take to hold to account all who participated in bringing the crisis to where it is,” Aoun said, according to his Twitter account.

Opinion

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One of Lebanon’s most influential politicians, Parliament Speaker Nabih Berri, said on Wednesday that debt restructuring was the best solution for looming maturities.

Lebanon will on Friday review proposals from firms bidding to give it financial and legal advice on its options, a source familiar with the matter said on Thursday. The government aims to take a quick decision on who to appoint, the source said.

So far, firms bidding to be Lebanon’s legal adviser are Dechert, Cleary Gottlieb, and White and Case, the source said.

Lebanon has issued requests for proposals to seven firms to provide it with financial advice.

The government on Wednesday formed a committee tasked with preparing an economic recovery plan that includes ministers, government officials, a central bank representative and economists, according to a copy of a decree seen by Reuters.