The federal government has raised the value of pure gasoline for the commercial sector by 28 per cent efficient 1 November, placing producers earlier than yet one more problem to their companies.
The choice will end in a rise within the closing value of merchandise by which pure gasoline is used.
The worth of pure gasoline now stands at $5.75 per million British thermal models (MMBtu) for the industries that closely eat gasoline like metal, petrochemicals and fertilisers, and $4.75 per MMBtu for different sectors.
The federal government’s choice brings to an finish the help it supplied to the commercial sector with the unfold of the coronavirus pandemic when it had set the value of pure gasoline at $4.5 per MMBtu in an try to extend exports.
World gasoline costs have been rising this yr amid the rising demand and a scarcity in provide. Gasoline costs in Europe, together with within the UK, reached file highs previously months, whereas the New York Mercantile Trade (Nymex) future contracts have doubled, reaching their highest ranges since late 2008.
Ahmed Khalifa, deputy chairman of Evergrow, a number one firm within the manufacturing of potassium fertilisers within the Center East, mentioned that almost all of the corporate’s manufacturing will see worth will increase starting from $6 to $10 as a result of choice.
Gasoline worth hikes can even add extra chips on the shoulders of corporations that wish to enterprise into new international markets, Khalifa mentioned, explaining that freight prices have additionally doubled. This can immediately end in a drastic drop within the income of exporters who had signed contracts with the importing events earlier than the rise in transport and gasoline prices.
Khalifa famous that electrical energy costs might also enhance, which implies that manufacturing value will hike additional.
Khaled Abul-Makarem, chairman of the Chemical Industries Export Council, mentioned that petrochemicals and fertilisers are among the many most affected sectors by pure gasoline worth rises. Gasoline is a most important element in some fertilisers, primarily making as much as 80 per cent of the product. The shortage of pure gasoline globally will enhance demand on Egyptian merchandise, however since exporters had already signed contracts primarily based on cheaper costs, they’ll both need to cancel the outdated contracts, and therefore lose their clients, or export their merchandise and shoulder the losses, he added.
The margin of losses relies on how a lot gasoline is used within the manufacturing of the product, Abul-Makarem mentioned, mentioning that it’s a proper choice on the fallacious time. The rise within the worth of pure gasoline ought to have occurred later to issue it within the exporters’ contracts.
Some international locations have the leverage to compete towards Egyptian merchandise, he said. Petroleum-producing Arab international locations can present pure gasoline at cheaper costs, subsequently their merchandise will value lower than Egyptians’, particularly within the petrochemicals subject. Moroccan fertilisers may compete with Egypt’s, he added.
Quite a few corporations within the constructing supplies sector which can be listed on the Egyptian Inventory Trade reported the impact of pure gasoline worth rise on a number of industries.
Alexandria’s Ezz Dekheila Metal mentioned that pure gasoline is without doubt one of the most important components within the manufacturing of iron as a uncooked materials. Its worth enhance will certainly have an effect on the price of manufacturing, the corporate mentioned, including that it’s versatile sufficient to vary the quantity of uncooked supplies used within the manufacturing course of.
The South Valley Cement Firm expects the price of manufacturing to rise from between 30 per cent to 50 per cent on account of the latest enhance in gasoline costs, whereas Qena’s Misr Cement Firm mentioned it depends on coal as the primary supply of vitality.
Mohamed Hanafi, head of the Steel Industries Chamber on the Federation of Egyptian Industries, anticipates the heaviest toll will fall on glass, fertilisers, and petrochemicals.
Hanafi careworn that the impact of the rise within the worth of pure gasoline on steel industries can be restricted and that manufacturing facility homeowners can deal with the rise with out elevating the value of the ultimate product.
The larger drawback, nonetheless, would be the impact of the rising worth of pure gasoline on energy stations.
Tamer Abu Bakr, head of the Power Committee on the federation, mentioned that the industries that closely use pure gasoline will elevate their costs, however their merchandise will stay cheaper than these imported as a result of gasoline costs elevated overseas at increased charges than in Egypt.
Industries with heavy gasoline consumption will elevate the value of the ultimate product by between 15 per cent and 20 per cent, whereas the sectors that use pure gasoline solely as a supply of vitality will enhance their costs by 5 per cent or 10 per cent, Abu Bakr famous.
*A model of this text seems in print within the 4 November, 2021 version of Al-Ahram Weekly
Quick hyperlink:
