Egypt minister hints gas subsidy coupons by winter

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A worker pumps fuel at a petrol station in Cairo on 16 January, 2012. Photo – Asmaa Waguih/Reuters

Egypt Local Development Minister Ahmed Zaki Abdeen announced on Thursday the government is planning to cut the fuel subsidy bill towards the end of this year.

The government official said plans are in place to start printing the coupons for subsidised gas. Egyptian President Mohammed Mursi’s administration was eyeing mid-October for the introduction of the coupons, touted by many observers as the first stage in a broader reform of energy subsidies. The local development minister, without elaborating, said the coupons would be ready for the start of the winter season. Egypt’s winter generally begins in December.

Similar plans were under discussion before long-term dictator Hosni Mubarak was toppled in February 2011.

Egypt’s budget deficit has ballooned to 11% of gross domestic product and the government is looking for ways to tackle the crucial issue effectively and bring down subsidy costs.

“The government has printed coupons to distribute butagas. These coupons will be distributed to those who need subsidised (butagas) until the implementation of the smart card system. The smart card system is better,” the minister told reporters while adding that the coupon system is expected to be implemented before the onset of winter.

Egypt is struggling to shore up its finances in the wake of the Arab Spring. It has been busy negotiating a $4.8 billion loan with the International Monetary Fund while securing aid from Gulf states, Turkey and Western countries at the same time.

The IMF deal demands Cairo restructure its subsidies on petroleum and other energy products. But analysts say measures to reduce energy subsidies are certain to be unpopular among many Egyptians, some of whom joined the uprising last year because of economic grievances.

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