Egypt's Petroleum Minister Tarek El Molla said that total subsidies for petroleum products reached LE64 billion as a result of increasing oil prices and currency floatation, adding that fuel subsidy cuts announced on Thursday will save the government around LE22 billion.
During a phone-in with Hona Al'asema talk show on the privately-owned satellite channel CBC on Saturday, Molla explained that the cost of fuel subsidies for the last fiscal year 2015/2016 reached LE51 billion, and LE35 billion for the current fiscal year.
Molla said that Thursday's move of cutting fuel subsidies is the beginning of a chain of procedures to rationalize subsidies, with various mechanisms put in place until market prices are reached, so that consumers will be buying the products at global market prices.
"These mechanisms will make Egypt like the rest of the countries in the world, and oil prices will be without any intervention from government; this aims at improving the product and the level of service," said Molla.
He stressed that 95-octane fuel will be sold at full global price, with no fixed price, whereas the rest of the fuels are still being subsidized currently.
Egypt raised energy prices from Friday, hours after the central bank floated the country's pound currency.
The move comes as part of Egypt's austerity measures aimed at securing a three-year, US$12 billion International Monetary Fund loan agreement.
The price of 92-octane gasoline was raised by 34.6 percent to LE3.5 from LE2.6 per liter, while 80-octane gasoline was raised by 46.8 percent to LE2.35 per liter from LE1.6.
Diesel fuel was raised to LE2.35 per liter, an increase of 30.5 percent from LE1.8. The less commonly used natural gas for vehicles was also raised by 45.5 percent to LE1.6 per cubic meter, up from LE1.1.
