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Egypt to raise fuel prices from midnight

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Egypt was set to raise mainstream fuel prices by up to 78 percent from midnight on Friday, an Oil Ministry source told Reuters, in a long-awaited step to cut energy subsidies to ease the burden on its swelling budget deficit.

Food and energy subsidies traditionally eat up a quarter of state spending. The government is cutting subsidies in hopes of reviving an economy battered by more than three years of political turmoil.

Successive governments have failed to curb energy product subsidies, fearing backlash from a public used to cheap fuel.

“The increase will start being implemented by midnight,” the source said.

The source said the price of 92 octane gasoline would be 2.60 Egyptian pounds (36 cents) per liter, up 40 percent from its current price of 1.85 pounds, while 80 octane gasoline would rise to 1.60 pounds per liter, up 78 percent.

Diesel will rise to 1.80 pounds per liter, an increase of 63 percent, while the less commonly used natural gas for vehicles will rise by 175 percent to 1.10 pounds per cubic meter.

Egypt’s Finance Minister Hany Kadry Dimian announced deep cuts in energy subsidies in the 2014/15 budget that would save the government 40 billion pounds.

The revised budget seeks to reduce the deficit to 10 percent of gross domestic product in the next fiscal year, from an expected shortfall of 12 percent in the 2013/14 fiscal year. ($1 = 7.1501 Egyptian Pounds)