Government opaque on fuel price rises

02-12-2018 09:30 AM

Youssef Sidhom

Youssef Sidhom



Problems on hold


Readers of Egyptian State-owned dailies have observed that, throughout the one-month period from mid-October to mid-November, the front pages of these papers have regularly carried coloured advertisement-like lists attributed to the Ministry of Petroleum. Curiously, these lists were no advertisements, but neither were they news; they merely splashed figures of prices of the various types of fuel: benzene, diesel and gas. The lists compared local prices to corresponding international values, cited the quantities imported by Egypt, also the difference between the global market value and the local selling price of fuel, revealing thus the volume of fuel subsidy the State is shouldering. The lists offered nothing but the figures; no purpose for publishing them was cited. The public was left to speculate whatever that could mean.

Not surprisingly, rumours that the government intended to raise fuel prices went viral on social media. General unease set in; transport costs were expected to rise, as would the prices of all goods on the market.

It is no secret that the government’s insistence on adopting a mysterious, opaque approach is behind the public’s apprehension of the unexplained printing of the lists; the public must be excused for circulating rumours.

The government’s policy regarding fuel prices amazes me. Observers of the economic scene in Egypt are fully aware that official announcements have set 2020 as the year when State subsidy of goods and services would be completely lifted. This implies an inevitable, gradual rise in fuel price. Yet the government acts as though it fears the public; it chooses obscurity and opacity, imagining that it could thus shield itself from public discontent. Instead of announcing a well-defined plan of reasonable, quarterly fuel price increases that could be assimilated by the public, it chooses to shock the public and rock the markets with large annual increases.

It is not as though the fuel price predicament is anything new; it has been recurrent and has repeatedly aroused the anger of Egyptians. I broached the topic a few times, most recently on 1 July 2018 under the title: “Raising fuel prices: right decision, wrong approach”. []

I refuted the policies set by the Egyptian government since 2016 and its commitment to the International Monetary Fund and international funding institutions to float the Egyptian Pound, and to lift subsidies from all services and goods. This would allow the State to free the subsidy funds which subsidised rich and poor indiscriminately, and channel them into development, and raising meagre salaries and pensions. In short, the State would in effect be finally “directing the subsidy to those who most deserve it”, as so many previous governments had pledged but were unable to do.

I wonder, why the government insists on implementing right decisions the wrong way? Why does it fail to transparently explain its policies to the public, so that the people could ultimately shoulder the pain without imagining that the government is out to get them? Businessmen and investors too need this transparency; they need to know of the government’s schedule to raise prices, so they could adapt their businesses and plan their investments accordingly.

There has been talk that Petroleum Minister Tarek al-Mulla has denied that the prices of oil products will be raised any time soon. This denial is not enough; Mr Mulla needs to announce the schedule and rates of price increases expected from now and until 2020, if there is ever to be trust between the government and the public.

Watani International

2 December 2018

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