| CAIRO, April 15
CAIRO, April 15 Fuel subsidies will cost Egypt
more than 120 billion Egyptian pounds ($17.4 billion) this
financial year, above previous estimates, as a falling local
currency adds strain to the budget, Oil Minister Osama Kamal
told Reuters on Monday.
Egypt is under pressure to curb its soaring fuel subsidy
bill, which accounts for a fifth of state spending, to secure a
$4.8 billion loan from the International Monetary Fund. But
Kamal cast doubt on his previous estimate that the cost would
hit 120 billion pounds in the 2012/13 fiscal year to June 30.
"I imagine for this year we will exceed this figure," he
said in an interview.
A growing population and a steady decline in the pound have
pushed up the subsidy bill for imported energy which was
originally budgeted at 95 billion pounds in 2011/12, itself a 40
percent jump from the previous fiscal year.
The government has said it will start rationing
state-subsidised motor fuel on July 1, the first day of the new
financial year. But Kamal raised the possibility that this could
be pushed back, saying he had come up with three scenarios that
would be presented to parliament and which may delay rationing
until later in the financial year.
"In the scenario of not implementing the subsidy (reform) at
all, the subsidy figure is expected to reach 140 billion pounds
in the new year," he said.
Egypt, which used to be a significant gas exporter, is
struggling to cover the cost of energy imports after a popular
uprising in 2011 which drove away investors and drained its
foreign reserves to a critical level of $13.4 billion in March -
insufficient to cover three months of total imports.
The country needs around 500 million cubic feet of gas a day
to cover its electricity needs and an additional 500-700 million
cubic feet for its industrial needs, said Kamal.
Egyptian officials have been seeking energy import deals on
preferential terms from friendly countries. Kamal, who visited
Moscow recently, said negotiations were underway with Russia
over gas imports.
Last week Qatar said it would extend gas supplies to Egypt
during the summer, when energy consumption reaches a peak, and
Kamal said the two countries were close to an agreement on the
Some of these supplies from Qatar could be provided through
a government tender for importing liquefied natural gas,
starting in October, which is expected to be awarded "within
days", he added.
Egypt is estimated to owe at least $5 billion to foreign
energy firms. Kamal declined to give a figure but said that it
had already repaid $1 billion and would pay another $1 billion
in a "few weeks".
The government currently supplies around 42.5 million
litres of diesel a day but long lines at filling stations
suggest that demand is still not being met.
Farmers say they are concerned about a shortage of diesel
supply to power irrigation pumps and tractors for the harvest
season which may hinder this year's wheat crop.
"There is an agreement between us and the Agriculture
Ministry to provide 120 million litres for farmers during the
three months of the harvest ... There is no (problem), all the
farmers have stocks of diesel in (large amounts)," Kamal said.
($1 = 6.8862 Egyptian pounds)
(Additional reporting by Nadia El-Gowly and Ehab Farouk;
editing by David Stamp)