How will the government apply the automatic pricing mechanism for petroleum products


04:36 PM

Saturday, April 6, 2019

I wrote – Yasmin Salim:

The Egyptian government will announce the implementation of the automatic pricing mechanism for petroleum products on June 5 with the first price adjustment to be made under this mechanism by the end of September 2019,

The IMF said in a report on the fourth revision of Egypt's economic reform program, which was revealed today, that the government will increase fuel prices to the cost price in mid-June, except "Butazaz and Mazut used in bakeries and generation of electricity ".

The report pointed out that current fuel prices in Egypt are between 85 and 90% of the price of its cost.

The fund said the government will announce the implementation of the new mechanism in all petroleum products except "butchery and mazut used in baking and electricity generation."

What is the new pricing mechanism?

The automatic pricing mechanism for petroleum products is to link the selling price to the consumer at the cost of supply, allowing the government to release the price of the fuel and cancel the subsidy.

The mechanism is based on a price formula, including world oil prices, the pound's exchange rate against the dollar and operating costs within Egypt, allowing the rise and fall of the price of the product according to the change in the elements of cost. Of State.

Many countries link the price of fuel to changes in global oil prices, if the price of oil rises, the price of fuel rises and, if oil falls, the price of fuel falls.

The government has already implemented this mechanism on benzene 95 as of the end of last December and at the end of last March the government revised the price of gasoline according to the price formula of the automatic pricing mechanism and decided to install it at the current price of 7.75 pounds, for 3 months.

According to this mechanism, which has been applied to benzene 95, the government has set up a technical committee, which includes representatives from the oil and finance ministries and the Petroleum Authority, called the "Automated Petroleum Pricing Mechanism Monitoring Committee". The task is to review gasoline prices every three months. The price is about 10% of the price specified.

According to this mechanism, the price of gasoline can be increased, decreased or stabilized every 3 months, according to the change in cost factors.

According to the government, the pricing mechanism was established to achieve the price of fuel at the cost price of all petroleum products and to maintain the state budget of the exchange rate variations and global fuel prices.

The government pledged to implement the automatic pricing mechanism for remaining fuels in June 2019. The price will be moved for the first time under the mechanism by the end of September, except "butane and fuel oil used in bakeries and the generation of electricity. "

Brent prices are currently at about $ 70 a barrel, which is expected to be around 2019, compared with an average of $ 71.76 a barrel in 2018.

The draft budget for the current fiscal year sets the average price of a barrel of oil at $ 67 against $ 55 in the budget for the last fiscal year before deciding to revise the price and raise it to $ 70.

In the next fiscal year 2019-2020, the government raised its oil price estimate to $ 68 a barrel, and the Finance Ministry said that each oil price increase in the new budget would cost £ 2.3 billion .

Read too:

How does the new petrol pricing mechanism work?

Why has it become important for the Egyptians to follow the movements of world oil prices?

What does the government's decision to apply the 95th gasoline pricing mechanism mean from April?

Official Decision The government determines the price mechanism for benzene 95 .. The change begins after 3 months

What is the "automatic pricing" mechanism of gasoline that the government started to apply?


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