Tuesday, April 03, 2012

Egypt: Fuel shortage threatens bread supplies

Source: IRIN

CAIRO, 2 April 2012 (IRIN) - It has been three months since a fuel shortage hit Egypt, and people’s patience is wearing thin amid fears the crisis could disrupt the production of subsidized bread.

“I move from one petrol station to another every day to find the fuel necessary for the work of the bakery,” Omar Muselhi, a bakery owner from Giza, told IRIN. “I cannot do this for long. If things get worse, I will close down.”

Most of Egypt’s subsidized bakeries need diesel to operate, and some have had to close, for example in the Nile Delta governorate of Monofiya (Arabic).

Outside Muselhi’s bakery, men, women and children form two long lines, and wait their turn.

“I buy 20 loaves of this bread for one pound, whereas the same number sells for four pounds at unsubsidized bakeries,” said Ayman Farahat, standing in line outside the bakery. “This shows how important these bakeries are for people like me.”

Observers say there is a 35 percent shortfall in fuel supplies. The government blames hoarding for the crisis. Thousands of cars queue outside petrol stations from early morning, while long queues form outside gas cylinder centres.

“We are doing our best to solve the problem, but what is happening is abnormal,” Petroleum Minister Abdallah Ghorab said on 24 March. “Some people take the subsidized fuel and sell it on the black market.”

The Petroleum Ministry has increased daily diesel supplies from 36,000 tons to 38,000 tons; petrol supplies from 16,000 to 18,000 tons; and gas cylinders from one million to 1.3 million.

But despite the move, there are numerous reports (Arabic) of fighting over fuel, reflecting citizens’ exasperation, and the need for further government intervention

Ambulance services are also at risk.

“The drivers go to petrol stations from early morning,” Naeem Rizk, the operations manager at Cairo’s main ambulance point, told IRIN. “Sometimes they spend the whole day waiting, but when their turn comes, they are told the fuel is over.”

When a policeman recently called Rizk to ask for help after he was wounded in a fight against armed men on the outskirts of Cairo, Rizk could not find an ambulance with enough fuel to take the policeman to hospital. The policeman’s colleagues had to call the Interior Ministry to borrow some.

Mohamed Abdullah, a 30-year-old ambulance driver, says his job has become even more stressful. “There are always long queues at petrol stations…This prevents me from reaching patients in time. The patients’ relatives always yell at me.”

Rethinking subsidies

Some economists believe the current crisis may force the government to rethink its fuel subsidies’ policy. Egypt spent the equivalent of US$83.3 billion subsidizing fuel over the past five years, according to the Petroleum Ministry.

“Around 60 percent of these subsidies go to people who do not deserve them,” said Rashad Abdo, a leading economist from Cairo University. “This makes it necessary for the government to rethink these subsidies.”

The government is currently reconsidering its support to major industrial institutions, which account for almost 70 percent of fuel subventions.

“If we can reduce petroleum subsidies by 10 percent, we can channel this money for the building of houses, hospitals, or schools,” said Petroleum Minister Ghorab. “We need to deliver subsidies to those who deserve them,” he was quoted as saying by al Masry Al Youm newspaper (Arabic) on 11 March.

Another government plan envisages the issuing of vouchers to poorer citizens to enable them to buy cooking gas for the equivalent of 83 US cents instead of US$5 for everyone else.