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Egypt raises gasoline prices by up to 30 per cent
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The Egyptian government is raising the prices of gasoline and diesel fuel by up to 30 per cent, the government newspaper Al Ahram has said. The long-awaited decision, unpopular with the middle classes and vehicle operators, will reduce the government's massive budget deficit, forecast at more than 9 per cent of gross domestic product in the 2006/7 fiscal year. |
The government has set aside about 40 billion (US$7 billion), about one fifth of all spending, for energy subsidies this year and has been looking for ways to reduce the burden. The real cost of the subsidy increases as the world price of crude oil goes up, though the government does recover some of the cost through revenue from its own oil exports.
The newspaper said that the new price for 90-octane fuel, the most widely used in gasoline vehicles, would rise 30 per cent from its current figure. The price had not changed since 1993. The price of diesel, which doubled in September 2004, will go up 25 per cent from its original price. Diesel is politically sensitive because it is the fuel of choice for trucks and private minibuses.
However, Al Ahram did not mention any changes in the prices of 80-octane gasoline. The government tried to promote the 92-octane fuel last year by telling some gas stations not to offer 90-octane fuel, but the price differential was big enough to push most drivers to stations where the cheaper fuel was available. The newspaper said the decision to raise prices was based on the rise in the world price for oil.
Egyptian gasoline is among the cheapest in the world but many Egyptians argue that salaries are also very low. The announcement coincided with the start of a three-day holiday weekend, when many truckers and taxi drivers will be off work and less likely to protest at the increase.
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