While Petroleum Minister Sherif Haddara told Ahram Online that Egypt is not suffering a petroleum shortage, the office of Egyptian President Dr. Mohamed Morsi released a report listing the following five reasons causing the current fuel shortage crisis:
1. Increase in the market’s demand, especially due to smuggling: According to the report, about 380.5 million liters of smuggled diesel and 52.1 million liters of smuggled gas were caught from June 2012 till May 2013.
2. The post-revolution uncontrollable chaos in Egypt: The report states that the lack of security and control led to a flourishing black market, “especially as Egyptian gas prices are extremely low compared to the rest of the countries in the region”. A subsidized liter of diesel costs 1.1 LE in Egypt, whereas in Turkey it is being sold at 18 LE, in Sudan at 4 LE, and in Jordan at 8 LE.
3. Late supplies to Upper Egypt’s are intensifying the fuel shortage: As railways are constantly blocked by protesting citizens, the fuel reaches its destination in Upper Egypt’s cities in 20 days instead of six.
4. The decrease of domestic production due to the country’s worn out refineries: The report said that the newest refinery was established 13 years ago, and there were no plans to develop them according to the market’s increasing demand.
5. Fuel supply depends heavily on the availability of foreign reserves: The report stated that this is a huge challenge, due to the debt of the Egyptian General Petroleum Corporation ($6.5 billion as of 30th of June 2012 and $5.4 billion as of 31st of May 2013) and the decrease in currency reserves from $36 billion in February 2011 to $14 billion in June 2012.
In reaction to the crisis, the president is planning to implement the smart-coupon system, place strategic gas stations in all governorates and create an information database between the Ministry of Petroleum, Ministry of Interior and Ministry of Supply. Additionally the plan is to develop the refineries, establish new labs and keep looking for new oil wells in Egypt.