The Egyptian government on Wednesday approved a 75 percent increase in diesel prices to reduce petroleum subsidies in the industrial sector and confront the steady increase in global energy prices, said Petroleum Ministry sources.

The sources said the price of diesel would rise to LE1,750 per ton from the current LE1000, and that the decision is imperative for facing record prices.

The sources, who requested anonymity, said that despite the price hike, domestic diesel prices will resemble global market prices. The sources explained that the decision aims to reduce state expenditures on subsidized petroleum products, whose total bill the government estimates at LE95.5 billion. Some suspect the true bill exceeds LE114 billion.

The sources said the government made the decision in November 2011 to increase gas prices for energy intensive industries, which mainly include the iron, glass, ceramics, and cement. According to the sources, the government delayed announcing the decision’s diesel component because it feared price hikes in construction materials.

Meanwhile, sources from within the Egyptian Natural Gas Holding Company (EGAS) said the company had not yet received formal notification from the ministry or the government concerning the new prices. The sources said they expect the decision to be implemented retroactively as was done in 2008, when executive orders to raise energy prices were issued two months after the decision was issued.

Translated from Al-Masry Al-Youm