Diesel shortages have been causing havoc in Cairo and neighbouring governorates this week, reports Nesma Nowar
Cairo traffic was crippled this week as a result of a strike by microbus drivers protesting against diesel shortages.
Major roads in and around the capital were blocked by angry drivers, many of whom had to wait for hours to buy diesel fuel. The blocked roads caused traffic chaos, with commuters stuck for hours and failing to reach work or home on time.
Many people were seen riding carts in order to reach their destinations.
On Monday, matters got worse with microbus drivers across Cairo going on strike and causing heavier congestion on the city’s roads. The drivers blocked some of Cairo’s most important roads, triggering brawls between passing cars and striking drivers.
Diesel shortages were evident in other governorates as well. In Gharbiya, congestion at one petrol station claimed one life, and roads were blocked by enraged microbus drivers in Sharqiya, Qalioubiya and Menoufiya governorates.
In Beheira governorate, long queues in front of petrol stations blocked roads and local farmers announced they would stop farming because of diesel shortages and the halting of agricultural vehicles, threatening crops.
In response to the crisis, Petroleum Minister Osama Kamal dismissed the heads of the state-owned Misr Petroleum Company and the Egyptian General Petroleum Corporation (EGPC).
Kamal also ordered the supply of an additional one million litres of diesel to military-run filling stations. He said that the EGPC was pumping 35,000 tonnes of diesel daily, quantities that exceeded market demand.
In a telephone interview conducted on television the minister said that the microbus drivers strike had been planned and that it had had nothing to do with diesel shortages, but rather was about traffic tickets.
However, the drivers said they were protesting against diesel shortages and high prices on the black market.
But while the minister blamed the shortages on smuggling and profiteering by black marketeers, the head of the General Division of Petroleum Products at the Federation of Chambers of Commerce, Hossam Arafat, blamed the crisis on a general shortage of diesel on the market.
Though Egypt has seen similar shortages in recent years, the present shortage has been compounded by the hard economic conditions the country is going through.
Such conditions, Arafat said, were making it hard for the government to secure the needed cash to import diesel fuel, and imports had been made more expensive by higher dollar rates and Egypt’s credit downgrades.
In order to end the current crisis, the government would need to secure some $1.5 billion to import diesel fuel until the end of the current financial year in June, Arafat said. It would also have to pump larger quantities of diesel and tighten controls over the market.
Arafat said that the fuel should be distributed fairly among the governorates depending on each governorate’s consumption.
Shortages of diesel fuel are a recurring problem in Egypt, “however this crisis is the longest and is now entering its 70th day and is ongoing,” Arafat told Al-Ahram Weekly.
One expert from the petroleum industry, who preferred to remain anonymous, said that diesel shortages were a common problem in Egypt, indicating a deep-rooted problem of mismanagement and poor planning by the government.
The current problem was no exception to this rule, though it had been exacerbated by the current economic challenges.
The source agreed with Arafat that the government lacked the necessary liquidity to pay for the fuel it needs. He added that credit downgrades were negatively affecting import activities, noting that each time the country’s credit rating decreases, the amount of guarantees and preconditions for import purposes increases.
“Many suppliers are now demanding payment in advance, something the government might not be able to do,” the source said.
While Arafat believes that securing the needed funds and pumping extra diesel could end the shortages, the anonymous source saw no end in sight for the crisis. He said that the crisis could not be solved by a weak government and in the present deteriorating security conditions.
Only a new government of technocrats could solve the problem, the source said. “Pumping extra litres a day will not end the problem,” the source told the Weekly. “Our problem isn’t a tactical one, but a strategic one,” he said, adding that the diesel shortages needed a strategic vision to solve them.
The source said that achieving political and economic stability was indispensable for solving the current diesel crisis. “If the current conditions drag on, the diesel crisis will get more severe everyday,” he said.
Meanwhile, he denied assertions by the government that smuggling and stockpiling of diesel were the reasons behind the crisis, saying that the government had long blamed shortages on smuggling in order to avoid blame.
Though fuel smuggling exists, it could not cause such shortages, the anonymous source said.
Egypt needs 40 million tonnes of diesel daily to cover its consumption, Arafat said, adding that the country imports 40 per cent of its needs of diesel whereas 60 per cent is produced locally.
Diesel is sold at a fraction of its real cost due to energy subsidies that add to the country’s budget deficit.
The government is presently seeking to trim the country’s gaping budget deficit and secure a $4.8 billion loan from the International Monetary Fund.
It is therefore working on an economic programme that includes cuts to fuel subsidies. Last year, subsidies on 95-octane gasoline, the highest quality, were eliminated, and fuel prices were raised in various sectors last month.
Diesel fuel subsidies account for nearly 47 per cent of the energy subsidy in the 2012/13 budget, and they are likely to stand at LE55 billion from a predicted total of LE120 billion allocated to petroleum subsidies.