CAIRO — Fathy Ali is beyond anger as he queues for hours in a line of 64 trucks and buses to fill his tank with scarce subsidized diesel fuel, known in Egypt as “Solar.” “This has become part of my life. I come and wait for hours or days, depending on my luck,” the chain-smoking bus driver said at a besieged gas station on Cairo's Suez High Road, wrapped in a scarf and thick coat for the long ordeal. “At the start it used to upset me a lot but now I've kind of given up.” Diesel supplies are drying up as a cash-strapped government struggles to cap a mounting bill for subsidies it has promised the IMF it will reform to secure an elusive $4.8 billion loan desperately needed to keep a sagging economy afloat. The situation appears near breakdown with growing shortages, unsustainable subsidies and foreign exchange reserves running out, raising the risk that fuel bottlenecks lead to food shortages and pose a risk to political stability. Foreign reserves are down below $15 billion, less than three months' imports, despite deposits from Qatar and Turkey. The Egyptian pound has lost 8 percent of its value this year and a black market has emerged for hard currency. The nation's strategic reserve of diesel fuel is down to three days' supply, the official MENA news agency quoted a government official as saying last week. Bakeries that use diesel to make staple subsidized bread have been told to keep 10 days' fuel supply but not all have the capacity. The Muslim Brotherhood-led government of President Mohamed Morsi this week postponed for up to three months a rationing system for subsidized fuel due to start in April in what looks like an attempt to avoid upsetting voters before parliamentary elections due that month. But reforms cannot be delayed for long, economists say. “Fuel shortages are a symptom of the strains on Egypt's unsustainable subsidy system,” said Simon Kitchen, an economist at EFG-Hermes in Cairo. Two government measures have aggravated the problem. In December, the subsidy on 95-octane petrol used by the wealthiest Egyptians was scrapped. That drove some motorists down-market to buy lower-grade fuel, raising the demand for subsidized 92-octane gasoline. Then in a drive to curb theft, smuggling and other abuses, the government restricted distribution of heavily subsidized low-grade gas oil used by trucks, tractors and buses to filling stations owned and operated by the military. – Reuters
