Egyptian gas stations will begin distributing gasoline and diesel fuel under a coupon system in July, according to Egyptian Minister of Petroleum and Mineral Resources Osama Kamal.
Preparations for implementing the plan, previously scheduled to begin in April, are now complete, Kamal said February 20th.
The plan aims "to rationalise subsidies and petroleum product consumption by limiting the quantity distributed on the markets, ultimately reducing consumption", said Radwan Fathallah, marketing studies adviser at the ministry.
All subsidy beneficiaries will be issued smart cards -- five million of which have already been prepared -- and they will use these to obtain their allocated amount of fuel, Fathallah said.
Private cars with a tank capacity of 1,600 cubic centimetres or less will be allocated 150 litres per month, large mass transit vehicles will be allocated 10,000 litres of diesel per year and heavy trucks will be allocated 100,000 litres of diesel per year.
"If a citizen exhausts his allocated amount, he will buy additional amounts at prices yet to be determined," Fathallah said.
Based on ministry studies, he said, the smart card price of 80-octane gasoline is expected to be 90 piastres ($0.13) per litre, while 90-octane gasoline will be sold at a subsidised rate, 1.75 pounds ($0.26), and the regular rate, 3 Egyptian pounds ($0.44).
Meanwhile, the ministry is expected to cancel subsidies on higher octane gasoline, with the price for 92-octane gasoline anticipated at 3.25 pounds ($0.48) per litre and the price for 95-octane gasoline at 4.75 pounds ($0.70) per litre.
The ministry is also considering setting its non-coupon price for diesel at 2 pounds ($0.29), compared to the subsidised price of 1.1 pounds ($0.16), Fathallah said.
Many previous subsidy beneficiaries, such as those who operate private school buses, embassy vehicles and tourist yachts, will lose their fuel subsidies, he said.
"This system is expected to reduce the current level of consumption by 30%," Fathallah said.
The ministry's latest data indicates there are about six million vehicles in Egypt, requiring close to 130 billion pounds ($19.3 billion) to subsidise the fuel they consume, he said.
The Ministry of Supply and Internal Trade and the Ministry of Petroleum are working to improve their intercommunication, to better monitor and control fuel markets and prevent black market fuel sales, said Amr Mukhtar, director of planning at the Ministry of Supply's subsidies department.
"The monitoring plan will be very rigorous, not only in Cairo but in all provinces, with emphasis on monitoring gas stations to ensure they distribute all they are allocated, to citizens, to end the shortage crisis on the market," he said.
Mukhtar said his ministry plans to increase the number of monitors on its staff, with the eventual goal of assigning one monitor to every gas station.
"Studies suggest that [fuel] manipulation and smuggling outside official markets strips about 30% of supply from these markets," he said.
Meanwhile, Fahim Abdul Zawaq, petroleum science professor at Cairo University, said he believes the new plan will have a positive effect on the economy and will help bring government spending under control.
The plan should be even more "comprehensive and broader, and develop the oil sector as a whole", he said.
In Abdul Zawaq's view, the initiative should also aim to modernise and develop the refining system in Egypt and improve workforce training so more locally-produced fuel can meet market needs at reasonable prices.
"It would be better if consumers turn to natural gas instead of diesel or gasoline, for example, because it is cheaper" and would also contribute to reduced consumption, he said.
The government's decision to rationalise fuel consumption has directly affected the automotive market in Egypt, said Hajj Ameed Mohammed, owner of a Cairo car dealership and member of the Cairo Chamber of Commerce's vehicle division.
"Consumers will now be inclined to buy economical cars that do not consume much fuel, which would weaken the market for cars with a tank capacity of more than 1600 cubic centimetres," he told Al-Shorfa.
Many new car buyers are now opting for cars that run on natural gas to alleviate the financial burden they expect because of the anticipated increase in gasoline costs, he said.