Al-Ahram Weekly Online   4 - 10 September 2008
Issue No. 913
Published in Cairo by AL-AHRAM established in 1875


Highly subsidised

OUR LE60.3 billion fuel subsidies rank Egypt the ninth- highest country worldwide to subsidise energy, said a report issued by the cabinet's Information and Decision Support Centre (IDSC). Energy subsidies counted for 72 per cent of the overall subsidies bill in 2007-08. The report classified countries in two categories: those subsidising fuel, and those who levy taxes on fuel consumption. Egypt belongs to the first category, with its fuel subsidy bill soaring to LE60.3 billion in fiscal year 2007-08, compared to LE40 billion in 2006-07. Other countries in the same category are numerous wealthy oil producing countries, including Saudi Arabia, Kuwait, Qatar and Venezuela.

The report noted that octane gas was subsidised by LE1.90 per litre in 2006. Egypt subsidised diesel even more heavily, as it paid out LE3.22 per litre in 2006, making it the fifth- highest country worldwide to subsidise diesel.

Subsidies represent the difference between the international price of energy and its local selling price. This year the price of 90 octane fuel increased to LE1.75 from LE1.30; the price of 92 octane fuel was upped to LE1.85 from LE1.40; and 95 octane fuel rose to LE2.75 from LE1.75. Prices of diesel and kerosene also increased to LE1.10 from LE0.75.

The report also pointed out that the value of energy subsidies have witnessed a 50 per cent increase over 2007-08, compared to LE40 billion in 2006-08. Energy subsidies were LE21.7 billion in 2003-2004. The report, issued earlier this month, had no mention of the government's decision to increase diesel and octane prices in May, a move that triggered a series of hikes in the prices of commodities and services.

Healthy growth

THE REAL growth rate of the Egyptian economy reached 7.2 per cent in 2007-08, compared to 7.1 per cent in 2006- 07, said Minister of Finance Youssef Boutros Ghali.

He also noted that the hike in growth rates over the past four years, including 4.5 per cent and 6.8 per cent in 2004- 05 and 2005-06 respectively, has helped push the growth rate in per capita income to 5.1 per cent in 2007-08, compared to 1.2 per cent in 2002-03.

Meanwhile overall government revenues increased by 21 per cent through the year to reach LE218.5 billion, compared to LE180.2 billion in 2006-07. Tax revenues fed a bulk of the increase as they jumped by 20 per cent to reach LE137.4 billion last fiscal year, compared to LE114.3 billion the year before.

Ghali said that embarking on the government's current fiscal policies would help tighten the fiscal deficit, and meanwhile contain the government's public debt. Egypt's fiscal deficit declined to 6.8 per cent of GDP in 2007-08 from 9.6 per cent in 2006-07. As for the public debt, it edged down from as high as 101 per cent of GDP in 2004-05 to 80.8 per cent of GDP in 2006-07 and 68.9 per cent in 2007-08.

Responsible energy

THE FOCUS on the responsible use of energy is more significant now than ever. The demand for energy is ever- increasing, while securing supplies, dealing with a highly volatile market and concerns over the threat of climate change form a backdrop against which sustainable energy resource development becomes an issue of great concern.

The recently issued Shell Sustainability Report 2007 focuses on the company's relentless efforts to meet different energy challenges, including the need to provide more energy and emit less carbon dioxide.

"Tomorrow's projects will be even more difficult, complex and capital-intensive. All will bring environmental and social challenges, with climate change foremost among them," said Jeroen van der Veer, chief executive of Royal Dutch Shell plc, who added that his company is committed to contribute to sustainable development, by helping meet the world's growing energy needs using economically, environmentally and socially responsible methods.

As one of the world's largest providers of transport fuels, the company removed the lead from all petrol types and was one of the first companies to produce zero-sulphur diesel on a commercial scale. Shell has also been actively involved in producing second-generation biofuels made from non-food organic materials such as straw, wood residue and algae, by using different conversion technologies.

"The experiments look promising," commented Veer, who added that at two second-generation demonstration plants where Shell is a co-partner, CO2 emissions are around 90 per cent lower on a life-cycle basis, than for conventional diesel or petrol. "These fuels do not compete with food production for agricultural land. But another five to 10 years of research and demonstration work is needed before they will be commercially available in significant amounts."

By means of ending the continuous venting of natural gas at oil production facilities and from the multibillion-dollar programme launched in 2000 to end continuous gas flaring at oil production facilities, the company managed to reduce its greenhouse gases emissions by nearly 25 per cent compared to 1990.

Central to Shell's business is the development of environmentally responsible technologies to extract difficult oils, including harder-to-extract-oil from the deep sea, remote areas and from oil sands. "Our technology is helping to unlock reserves of oil and gas in water up to 3,000 metres deep, overcoming the challenges of extreme pressures and freezing temperatures," said Veer.

Other responsibilities the company is undertaking include reducing packaging waste from a number of products the company supplies, producing more economical and environment-friendly lubricants, and preventing oil spills by means of improving pipeline inspection and maintenance in upstream business.

© Copyright Al-Ahram Weekly. All rights reserved

Issue 913 Front Page
Front Page | Egypt | Region | Economy | International | Opinion | Press review | Reader's corner | Culture | Heritage | Features | Living | Sports | Cartoons | People | Listings | BOOKS | TRAVEL
Current issue | Previous issue | Site map