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Diesel fuels anger

Diesel shortages are wreaking havoc and threatening to bring land cargo transport to a halt, Sherine Nasr reports

It seems that the government and the public are on two different wavelengths. While diesel shortages in fuelling stations continued to cripple the activity of many vital sectors during the week, officials from the Ministry of Petroleum reassured consumers that there is absolutely no shortage in diesel (gas oil) allotments for fuel stations.

Some even went as far as blaming the relative scarcity of fuel on the owners of fuelling stations who were allegedly taking advantage of the current situation to make profits, as Mohamed Shoeib, deputy to the head of the Egyptian General Petroleum Corporation ( EGPC ) for operations, explained to the daily talk show "90 Minutes" on Sunday.

But it does not take an expert's eye to tell that there is a problem and it has been ongoing for the past two weeks. Queues of heavy transport vehicles, tourist buses, minibuses and lorries lining up along streets to get fuel are causing heavy congestion on major roads and may even block traffic for hours in some areas. Such incidents were reported in Cairo, Giza, Helwan and Qalioubiya, and 6th October governorates.

While the majority refer to the government's attempt to raise the price of diesel (a heavily subsidised fuel sold for LE1.10 per litre; its actual cost before subsidy and without transportation fees is estimated at LE2.60), experts hold a different opinion -- and a more shocking one. " EGPC does not have enough liquidity to pay for the amount of diesel needed for import," said a former EGPC official, now a businessman who spoke to Al-Ahram Weekly on condition of anonymity. According to the source, the cash crunch is manifest in the inability to buy enough diesel fuel to meet demand.

While the source dismissed the notion that the shortage in diesel fuel is a step towards raising its price, he underlined that the situation amounts to a flagrant failure of planning on the part of EGPC and the ministry . "There is a problem of logistics. EGPC was not able to evaluate the amount needed for this time of the year in order to take the necessary measures to import on time."

Moreover, the facilities required in ports where diesel imports are received, mainly Alexandria and Suez, are lacking.

Prime Minister Ahmed Nazif denied any intention on the part of the government to raise the price of diesel.

Meanwhile, Mahmoud Nazim, first under-secretary in the Ministry of Petroleum , said that the oil sector pumps 40 million litres of diesel to the local market on a daily basis. "Extra amounts of fuel are being pumped to contain the problem," said Nazim to the daily Al-Wafd, adding that Egypt produces 75 per cent of its local needs of the fuel and imports the rest. "Diesel stocks can secure market needs for the next 20 days and this is a safe margin."

But the scene in the street contradicts those rosy statements. Vehicle owners clash among themselves and with attendants in fuelling stations after hours of waiting. Once finally there, they can only purchase half of their needs because available amounts are tight. A black market has rapidly formed and consumers are compelled to pay extra for the same quantity of fuel.

"Last night, it was havoc. Vehicles blocked the road and it was a relief to have my quota of diesel consumed. Such has been the case for the last week," said Rimon Alfi, owner of a fuelling station on the corniche in Maadi, adding that his daily allotment of 26,000 litres vanishes in a few hours whereas it would last all day under normal circumstances.

As a direct result of the diesel crunch, many activities related to transporting produce, construction materials, etc, came to a halt. Tourist buses reported that they have not been able to meet their itineraries and a sense of resentment prevails. Diesel is considered the basic fuel for heavy transport vehicles, electricity generators, some industries and hotels that need to generate their own electricity in remote areas.

"We have been advocating a gradual removal of subsidies on oil products for years now. A shift to market prices would have been swallowed easily by the public had it been done gradually," said the source, who added that the government made its mistake when it annulled the privileges given to oil refineries built in the free zones, according to the 5 May 2008 decisions. "As a result, interested investors stepped back and no more capacities were added while the local market's needs are on the rise," said the source.

Shortages in diesel are not the only problem. Shortages in other oil products -- including butane and gasoline -- are also raising concern.

© Al Ahram Weekly 2010