The Finance Ministry will lift the subsidy on 95-octane gasoline in three days in a move that will bring savings to the public treasury of between LE120-130 million, a ministry source said Thursday.
The fuel will now be sold at 585 piasters per liter, up from 275 piasters.
The source described the savings as “nominal” in relation to the budget deficit, but it will mean that small social programs such as feeding schoolchildren initiatives can be funded.
It is necessary to cancel subsidies for 95-octane gasoline, the source explained to Al-Masry Al-Youm, as beneficiaries are not those in need of financial support.
Savings to the budget as a result of all the proposed cuts to subsidies are expected to be up to LE26 billion, with cuts being applied gradually until these savings are made in the budget of fiscal year 2013/2014.
The financial savings expected from cutting subsidies for petroleum products as well as energy intensive-consumption factories during the current fiscal year are around LE3-4 billion.
The sources added that the coupons system for gasoline, diesel fuel, and butane cylinders would start to come into effect in April.
A source at the Ministry of Supply and Internal Trade on Thursday described the Cabinet's decision to cut subsidies on 95-octane gasoline as “defective,” asserting that it would lead to a new crisis in the coming few days.
The ministry officially alerted the Cabinet to its concerns about the effects of cancelling the 95-octane gasoline subsidy without a developing a clear mechanism, the source told Al-Masry Al-Youm on condition of anonymity.
There are concerns that the move would lead to increased demand for 90-octane and 92-octane gasoline that supply might not be able to meet.
The Petroleum Ministry would have preferred to lift the subsidy on 95-octane gasoline as a first step before the subsidies on 92, 90 and 80 octane gasoline would also be lifted, the source said.
Edited translation from Al-Masry Al-Youm