Fuel-short Egypt faces long, hot summer

Tue Jun 11, 2013 12:03pm EDT
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By Patrick Werr and Maggie Fick

CAIRO (Reuters) - A gift of gas to Egypt from tiny Qatar shows just how tough this summer is shaping up to be for the government in Cairo, facing a funding crunch and power cuts as it struggles to contain explosive public discontent.

Daily blackouts have darkened homes and businesses across the country over the past few weeks, aggravated in recent days by an early summer heatwave that has Egyptians cranking up their air conditioners.

Qatar on Monday offered five cargoes of liquefied natural gas (LNG), worth perhaps $300 million, "as a gift to the Egyptian people during the summer months".

It is a small gesture from a Gulf ally which has already lent Egypt some $7 billion in the past year but highlights how tough times are for the 84 million Egyptians.

Falling living standards since the 2011 revolt that ended six decades of military rule have led to disillusionment focused on Islamist President Mohamed Mursi and his Muslim Brotherhood. Opponents have called for mass protests on June 30, the first anniversary of Mursi's election.

The country's budget deficit has widened, the Egyptian pound has weakened, and investors have taken fright, sending the Cairo share index on Monday to its lowest close in more than 10 months.

A vicious circle of unrest and slumping tourism revenues has drained government cash reserves, leaving ministers scrambling for favors abroad, notably to maintain supplies of heavily subsidized fuel and bread that account for a quarter of all government spending.

"We will suffer this summer," said Mohamed Shoeib, who until recently ran EGAS, the state natural gas concern, and is now a managing director at private equity firm Citadel Capital.   Continued...

People and vehicles are seen during a power cut in Toukh, El-Kalubia governorate, about 25 km (16 miles) northeast of Cairo May 26, 2013. REUTERS/Amr Abdallah Dalsh