* Energy subsidies account for 20 percent of state spending
* Government consulting industry leaders to set dates
* Will continue to support industries that affect the poor
By Patrick Werr
CAIRO, April 24 Egypt aims next month to issue a
schedule of gradual rises in the subsidised prices various
industries pay for fuel, to bring them near to world levels in
four years, its trade and industry minister said.
A reduction in energy subsidies is widely seen as an
important step towards allowing Egypt to secure a $4.8 billion
loan from the International Monetary Fund (IMF) to shore up its
Egypt spends around a fifth of its budget on fuel subsidies,
and the government is under pressure to reduce them to plug a
deficit that has mushroomed since the popular uprising that
ousted Hosni Mubarak in early 2011.
A growing population and a falling currency are expected to
push the energy subsidy bill to more than 120 billion Egyptian
pounds ($17.4 billion) in the financial year that ends in June.
Trade and Industry Minister Hatem Saleh said the government
has been negotiating with industry leaders on the plan to
"A very big dialogue is taking place with the Federation of
Industries. I expect that within a week or two we will bring in
the petroleum minister, and there will be a protocol so that the
direction is clear for everyone," he said in an interview.
The protocol will set dates for increases in the price
different industries pay for natural gas, diesel and fuel oil.
"Some industries will continue to be supported and will not
reach world prices. They will be subsidised. These are
labour-intensive industries and strategic industries that have
an impact on poor people, such as basic food industries, basic
REACHING WORLD LEVELS
In February, the government raised the price of fuel oil,
which is widely used in energy-intensive local industries, to
1,500 Egyptian pounds per tonne from a previous 1,000 pounds.
It also increased prices of natural gas and diesel for some
industries by 50 percent, industry sources said at the time.
"Within four years, we will approach world prices,
especially energy intensive industries," Saleh told Reuters.
Egypt, which used to be a significant gas exporter, has
struggled to pay for energy imports since the uprising drove
away investors and tourists, two main sources of foreign
It has paid for energy imports partly by drawing down
foreign reserves, borrowing from foreign governments and
delaying payments to oil companies operating in Egypt.
Foreign reserves dropped to a critical level of $13.4
billion in March - insufficient to cover three months of total
The government has said it will start rationing
state-subsidised motor fuel in the second half of 2014.
Farmers say they are concerned about a shortage of diesel to
power irrigation pumps and tractors for the harvest season which
may hinder this year's wheat crop.