The collapse of the Egyptian pound may push fuel prices in Egypt to a new increase

Newsletter

09 Jan 2023

The collapse of the Egyptian pound may push fuel prices in Egypt to a new increase. The decline of the Egyptian pound against the US dollar during the fourth quarter of 2022 may prompt a new increase in gasoline prices in Egypt over the next few days, these new prices will continue until the end of March 2023. Petroleum prices are awaiting a new increase during the review of the next automatic pricing committee, which is held 4 times a year, as a result of changing exchange rates. In the event that petroleum prices remain at current levels locally, it is expected that the value of the petroleum subsidy bill will rise to exceed 100 billion EGP in the current fiscal year 2022-2023. We believe there might be a gradual increase in fuel prices as a result of the increase in the cost of importing petroleum products due to the decline in the value of the pound against the dollar. (Bloomberg Asharq)

Subsidies for petroleum products in Egypt jumped to 31 billion EGP during the first quarter of the fiscal year 2022-2023, due to the rise in global oil prices
At a time when the government was aiming for it to stand at 28 billion EGP during the entire current fiscal year, which ends next June. The fuel subsidy bill in the final account of Egypt's budget 2021-2022 amounted to 59 billion EGP, an increase of 212% over the fiscal year 2020-2021, which recorded 18.9 billion EGP. Egypt adopted the price of a barrel of oil at 80 USD in the budget for the current fiscal year 2022-2023, from 75 USD a barrel a year ago. Egypt annually consumes about 12 million tons of diesel and about 6.7 million tons of gasoline. (Bloomberg Asharq)
Egyptian pound tumbles to fresh record against US dollar
The EGP broke the 27 / USD 1 barrier, slipping another 1.9% against the greenback at several banks. The decline comes after the Central Bank of Egypt allowed the EGP to slide— dipping nearly 7% — after the country’s two biggest state-owned banks introduced certificates of deposit with a record-high yield of 25%. In October 2022, the CBE said it would adopt a more flexible exchange rate policy to back macroeconomic stability and sustainable growth, devaluing the pound by over 16% from 19.67 per dollar to 22.85 in order to absorb the economic shock triggered by the Russian-Ukrainian war. (Bloomberg Asharq)
Italy has reportedly submitted a proposal to the Egyptian Electricity Transmission Company to work on a joint 2.8 billion USD electricity interconnection project
Between the two countries with a capacity of 2.5-3 GW. Italy is offering to do the legwork: Italy has reportedly proposed signing an MoU to begin conducting a feasibility study for the project, the costs of which the Italian side would cover. The Italian proposal also commits the country to securing funding from Italian banks and European financing agencies for the project, were it to go ahead. (Bloomberg Asharq)
We’ve built a large surplus of electricity generation capacity over the past few years and Europe is looking for energy suppliers
Italy’s proposal comes as Europe faces an unprecedented energy crisis thanks to the loss of Russian fossil fuels. We’re well placed to help fill the gap: Egypt has already been preparing to link its electricity grids with Greece and Cyprus through a subsea cable as part of the USD 4 bn EuroAfrica Interconnector project since 2018, while the USD 1.8 bn 3 GW Egypt-Saudi electricity interconnections are set to go live in May 2025. Our grid is currently linked with Jordan, Palestine, Libya, and most recently Sudan. (Bloomberg Asharq)
November marked another rough month for auto sales
Which fell to their lowest level since at least the start of 2018 as the industry continued to face import restrictions. Some 5.2k passenger vehicles were sold in November, down 74% from November 2021. EGX-listed GB Auto sold just over 8.2k cars in 4Q 2019 which is the last year before covid-caused supply constraints hit the market. (Al Mal)
Passenger vehicle sales in November were the lowest ever recorded
Which include the Automotive Information Council (AMIC) sales data going back to the start of 2018. Excluding the outbreak of the pandemic in April 2020, the November data marks the third consecutive month of record low auto sales. Around 1.4k buses were sold in November, down 55% in comparison to November 2021. Truck sales dropped 64% y-o-y, also recording 1.4k units. (Al Mal)
Sales will likely pick up again this year after the central bank revoked import restrictions brought in last spring to conserve hard currency
Car sales fell through most of 2022 thanks to the restrictions, which made it almost impossible for distributors to bring fully built-up vehicles, assembly kits, and spare parts into the country and forced a number of global car manufacturers to suspend sales to Egypt. We might also see some new cars on the streets — though likely fewer than the government had initially hoped — through the expat car import scheme, which allows Egyptians living abroad to bring in cars using FX. (Al Mal)
Bahrain’s Bank ABC has completed the legal merger of Bank ABC Egypt and Blom Bank Egypt, following its acquisition of 99.5% of Blom Bank Egypt
This has been at least two years in the making: The two sides reached an initial agreement on the acquisition in January 2021 before tying the knot in August in a 424 million USD transaction, valuing Blom Bank’s Egyptian arm at 427 million USD (6.7 billion EGP at the time). The merger will expand Bank ABC’s local network to 68 branches throughout the country, adding Blom’s 41 locations to its existing 27-branch network. (Zawya)
National Investment Bank of Egypt sells its last stake in Abu Dhabi Islamic Bank-Egypt
The National Investment Bank (NIB) sold its stake to Abu Dhabi Islamic Bank (ADIB), bringing the UAE bank's stake in ADIB-Egypt to 52.6%. According to a statement on Thursday, ADIB's stake in ADIB-Egypt increased after the deal to 52.607%, as it purchased 9.6 million shares representing the National Investment Bank's stake in ADIB-Egypt's capital. The statement did not mention the value of the deal. In December, the National Investment Bank (NIB) cut its 10% stake in ADIB-Egypt to 2.4% by selling 30.4 million shares at an average price of 17.8 EGP per share to Respond Investment Company. (Zawya)