Smart card fuel subsidy scheme delayed at the last minute

A much-discussed, much-delayed smart card system to meter the distribution of subsidized fuel looks set to be postponed again at the request of President Abdel Fattah al-Sisi.

Last month, the government announced that starting June 15, both public and private vehicles would be unable to purchase subsidized fuel without a valid smart card. Officials said implementing the program would save the country billions.

During a Saturday meeting of the country’s council for economic development, Sisi urged the government to consider delaying the application of the cards until all parts of the country are covered, according to a statement from the president’s office.

Petroleum Ministry Spokesman Hamdy Abdel Aziz told Al-Watan newspaper that the ministry is obliged to follow the president’s orders, but is still awaiting official instructions.

At present, all the country’s residents can buy unlimited amounts of subsidized fuel, while the government is trying to trim the budget deficit and struggling to procure enough fuel to keep factories and power stations operating. Fuel subsidies cost the government LE126 billion last year.

 The current system provides little incentive to conserve fuel, and has created a black market for subsidized fuel in remote areas and across borders. Experts estimate that anywhere from 15 to 20 percent of subsidized fuel is diverted from the official supply chain.

The first phase of the fuel smart card program was designed to tackle smuggling by tracking the delivery and sale of fuel, rather than the limit consumer purchases. Any caps of individual buyers or price increases would come later.

Plans to introduce a smart card for fuel purchases have been floated since the Mubarak era, and official deadlines for adoption have been postponed several times since 2013.

A smart-card based system for allocating subsidized bread — launched under former President Mohamed Morsi, but often credited to Sisi — has succeeded in reducing bread subsidies by a third, officials claim. That program does cap the amount of bread card holders can purchase.