Anxious Egyptians face further rise in energy costs

02 Jun 2018

For Samia Tawfik, a housewife from a poor district of Cairo, making ends meet has been a struggle since the Egyptian government slashed fuel and electricity subsidies by up to 50 percent last summer.
Now further cuts are looming as Egypt pushes through an ambitious reform program that is tied to an agreement it signed in late 2016 with the International Monetary Fund (IMF) for a loan of $12 billion over three years.
The prospect of even higher costs for utilities leaves Tawfik, aged 35, almost lost for words.
“I don’t have anything to say, really. I don’t know if I’ve become numb or what, but I haven’t yet recovered from last year’s price increases,” she told Arab News. “My husband is jobless and my job as a cleaner would never be enough to feed my three children. My family’s destiny is now in the hands of God. We can’t do anything.”
Egyptians are also dreading the price increase in many everyday commodities, which usually follows any slashing of subsidies. Under the 2016 deal with the IMF, Egypt must bring in free pricing for fuel by the end of 2019. If, as local media reports suggest, the government cuts fuel subsidies by more than a quarter from the start of the 2018-2019 fiscal year in July, the cost of 92-octane petrol will go up from 5 Egyptian pounds ($0.28) per liter to between 6.5 and 7.5 Egyptian pounds per liter.
There are also reports that 80-octane petrol, one of the most common types of fuel in use, might be scrapped altogether.
Egypt also wants to slash its budget for electricity subsidies by almost half, from 30 billion to 16 billion Egyptian pounds.
“We are facing shock after shock. We usually don’t have any time to get over one phase of price hikes before being struck by another one,” said Mahmoud Shaker, a 40-year-old accountant and father of two. “I already have two jobs and I don’t have time for a third. What should I do now? I will have no option but to spend less on some items and prioritize others. Being able to expect the upcoming stage of price increases doesn’t make it any easier.”
There are signs that an official announcement is pending. For several days there have been adverts on TV and articles in the pro-government press featuring infographics detailing how much Egypt spends a year on subsidising energy. The budget for fuel subsidies in 2018-19 is 9.075 billion Egyptian pounds, down from 120 billion the previous year.
“The government must first take a series of social protection measures before increasing fuel prices … the state should protect low-income citizens by increasing pensions and salaries,” Montaser Riyad, an independent member of Parliament who is not usually given to criticizing the state, told Arab News.
“Any country that carries out economic reform should protect the poor and middle classes from the negative effects of these measures, especially after the inflation that occurred last year. These (protection) measures can help citizens adapt to the new economic decisions.”
The rise in energy costs comes soon after metro fares went up in May, sparking rare protests from angry commuters. Dozens were arrested for contravening a controversial 2013 law that severely restricts demonstrations.
The state has not allowed any large-scale demonstrations since then. Although most of those arrested last month have been released, the curbing of protest is yet another government cut that Egyptians accept they must now live with.
Raouf Amin, 48, who owns a mobile phone shop in Cairo, said: “I’m really suffering but I don’t plan to protest. I have kids to raise.”

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