Petrol shortages trigger tension in Egypt

Petrol shortages and rumours of price hikes created havoc in the Egyptian capital for the third straight day Tuesday, as motorists rushed to fill up their tanks despite official assurances.

The oil ministry said on Monday authorities were pumping 21.5 million litres of petrol daily, with nine million litres allocated for the Cairo governorate alone, denying any plans to raise the cost of petrol, which is subsidised.

But these assurances failed to calm motorists.

Taxi driver Mohammed Hussein said he criss-crossed the Egyptian capital on Tuesday in search of petrol.

"I drove to more than 10 petrol stations but they all had signs saying 'out of petrol' before finding one where I could fill up the tank," said Hussein. He nevertheless had to wait one hour in a long queue before being serviced at a station in southern Cairo, he added.

Authorities are blaming speculators and smugglers for the crisis.

"What we are witnessing is an artificial crisis caused by rumours by some people who have an interest in making profit," said Planning and International Cooperation Minister Fayza Abul Naga.

Newspapers have linked the crisis to smugglers who reportedly buy up the subsidised petrol to sell abroad at higher prices.

Petrol in Egypt is sold at almost half the market value.

The crisis has been exacerbated by allegations that the Egyptian government will lift subsidies on petrol as part of negotiations with the International Monetary Fund to shore up the economy after last year's unrest.

Officials have denied these claims.

"The government has no intention to raise the price of petrol," the oil ministry said in a statement, adding that it was pumping 33 percent more than usual onto the market to satisfy needs.

"We are currently pumping 21.5 million litres of petrol daily across the country to meet the needs of the local market," with nine million litres going to Cairo, oil ministry under-secretary Mahmud Nazim told reporters on Monday.

Since Sunday, motorists have rushed to fill up their cars, causing gridlock across Cairo -- a city of 20 million residents where streets are normally heavily congested.

Nazim said the rumours were "unfounded," adding that Egypt was not facing any shortages.

"The majority of Egypt's gasoline needs are produced by local refineries. Imports are estimated at not more than 10 percent, and all gasoline production units are working at full capacity," he told reporters.

On Monday Egyptian Prime Minister Kamal al-Ganzuri held talks with a delegation from the International Monetary Fund on the possibility of obtaining a 3.2 billion dollar (2.5 billion euros) loan to revive the economy.

"We discussed obtaining a loan from the IMF worth 3.2 billion dollars to help the government implement its programme to cut the budget deficit and the balance of payments," Abul Naga told reporters after the meeting.

Finance Minister Mumtaz Saeed also met the IMF delegation and later said that Egypt made a formal request for the loan.

Abul Naga insisted that the IMF has not imposed any conditions on Egypt in exchange for providing it with financial aid, including urging Cairo to raise the price of fuel.

Scrapping petrol subsidies could ease Egypt's budget deficit which the government says stands at 144 billion Egyptian pounds (around 24 billion dollars).

But financial analysts believe that the deficit for the current fiscal year -- from July 1 to end of June -- will be much larger.

"The estimated budget deficit for the current fiscal year will be larger than what has been announced by the government. It will be around 180 billion pounds (30 billion dollars)," said analyst Zeinab Abdel Rahman.

Egypt's financial woes worsened as unrest gripped the country following the ouster of veteran strongman Hosni Mubarak last February after an 18-day revolt.

The large fiscal deficit, a fall in receipts from the vital tourism industry and an investment climate badly affected by instability and violence all contributed to the slump.

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