Rising cost of petroleum subsidies may strain state budget

Petroleum Minister Abdallah Ghorab said petroleum subsidies could exceed LE100 billion in the fiscal year that starts in July due to rising global oil prices.

Ghorab said the jump would mark a 21 percent increase, up from LE83 billion last fiscal year.

Ghorab explained that the extra funds would be allocated for six main products, namely gasoline, diesel, fuel oil, butane, kerosene and natural gas.

A ministry official explained that subsidies are determined by the difference between production costs and sales, which reached LE737 billion over the last ten years, compared to LE9.3 billion from 1990 to 2000.

“The increase in subsidies will adversely affect government expenditure on education and health,” said Soheir Abul Enein, expert at the National Planning Institute. “But we have no choice, as increased petroleum prices could affect social stability.”

Enein said the government should offset the cost of subsidies by creating job opportunities to lower unemployment and ensure that subsidies are benefiting those most in need.

Translated from the Arabic Edition

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