CAIRO - Egypt's petroleum minister said Monday the country is “suffering” due to fuel subsidies, saying these funds are better diverted to other areas such as health care and education.
Tarek el-Molla, speaking at a conference in Cairo, showed in a presentation that between July and September 2015, the government paid 42 per cent of the cost of 92-octane gasoline, which is used to fuel private vehicles owned by more affluent Egyptians.
While a litre of 92-octane gasoline cost 4.5 Egyptian pounds (57 cents), it sold at 2.6 pounds (33 cents) at the pump, a graph in his presentation showed. El-Molla also highlighted similar disparities in the true cost and selling price of other fuel products.
“I meant to show you this graph to let you feel the challenge and how Egypt is suffering from the subsidy,” el-Molla told the conference. “Can you believe that all of us coming today at this event in our vehicles and our cars, the government is subsidizing us?”
He said this was the first time he had spoken about the topic this openly.
President Abdel Fattah el-Sissi had cut fuel subsidies in 2014 by more than 70 per cent, in a move that caused a public outcry but was welcomed by economists as a necessary step to save public funds for much-needed development projects.
El-Molla declined to share a timeline or the government's plans for future fuel subsidy cuts, saying announcing these plans ahead of time could prompt people to hoard gasoline to sell at a higher price later.
He said money spent on fuel subsidies should “at least get reduced to a reasonable number by which this money can be directed to health care, education, which would help the development of the country.”
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Meanwhile, in Edmonton, Alberta, the results of that province's oil royalty review are being delayed again.
Premier Rachel Notley now says they won't come out until sometime in the next few weeks.
Notley says her government wants to make sure it gets it right.
The review and the government's response to it were supposed to come out late last year, but in December Notley said the results would come out in early January.
Opposition critics say the delay is another blow to an industry under siege.
They note the oil and gas industry needs cost certainty as it responds to layoffs, plunging oil prices, and a forthcoming multibillion dollar a year carbon tax.
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In Halifax, the Canadian federal Finance Minister says the northern economy is suffering from slower growth than originally projected by the former Conservative government.
Bill Morneau told several hundred people attending a Halifax Chamber of Commerce luncheon that his department's projections on growth since the 2015 budget have fallen due to oil prices that are less than half those of 2014.
But he didn't indicate if that will mean the federal deficit will be higher than the Liberals promised during the latest election campaign.
Prime Minister Justin Trudeau promised during the campaign to run annual deficits of no more than $10 billion over the next two years while pumping billions into infrastructure projects to stimulate the stagnant economy.
The finance minister didn't provide specific figures on how the struggling economy will affect this promise, but dropped some hints that it is affecting budget plans.
“We knew when we were campaigning we were facing a slow-growth environment,” he said.
“The challenge is greater than we expected.”
The minister said there's hope that oil prices will improve, but as it stands a decreasing tax base means his department is expecting a $15 billion per year reduction of GDP beginning this year, compared with what was projected in the last budget.
“That's a starting point and it's important to have a frank view of where we're starting from,” he said.
Morneau is travelling across the country this week to seek input as he draws up his first federal budget.
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Elsewhere, Canadian Oil Sands (
TSX:COS,
Forum) was claiming victory in a bitter oil-patch takeover battle with Suncor Energy (
TSX:SU,
Forum), but says shareholders deserve to know exactly how much support the hostile $4-billion bid garnered before it was extended by Suncor past its Friday night deadline.
The oilsands giant's all-stock offer now is open until Jan. 27 under the same terms: A quarter of a Suncor share for each COS share.
The extension gives Suncor more time to make its case to shareholders and weigh its options. But COS on Monday urged its shareholders to reject the takeover as it currently stands.
“While only Suncor has access to all the tender results, the best information that COS currently has is that a strong majority of COS shareholders rejected the substantially undervalued and opportunistic Suncor bid,” the target company said in a release.
“COS believes that immediate disclosure of the number of shares tendered is required under Canadian and U.S. securities law in this situation as a material fact that would reasonably be expected to affect the decision of shareholders to accept or reject the Suncor bid.”
Bradley Freelan, a partner at law firm Fasken Martineau who specializes in mergers and acquisitions, said it can be inferred from Suncor's move that less than half of COS shares were tendered to its bid.
“They may as well just extend and figure out what they want to do next, perhaps increase the price and then see what kind of support they can get with perhaps a higher price,” he said.
“Maybe they're in discussions with some of their more significant shareholders to see if there's a price where they would do a deal.”
Prominent businessman Seymour Schulich, who has said he owns five per cent of COS, has vocally opposed the Suncor bid in its current form.
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VANCOUVER - The British Columbia government's final submission to the National Energy Board says it is unable to support Kinder Morgan's (
NYSE:KMI,
Forum) proposed pipeline expansion from Alberta to the West Coast.
B.C. Environment Minister Mary Polak says the company has not provided enough information about its proposed plans to double the pipeline to prevent or respond to oil spills in the ocean or on land.
Polak says the lack of information means the Trans Mountain pipeline expansion project has not met all of the five conditions the province has established for any new heavy-oil pipeline.
The minister says the province has submitted its final written assessment to the NEB, but it continues to evaluate the pipeline project.
The multibillion-dollar project would nearly triple the capacity of the existing pipeline that runs from a community near Edmonton to the Vancouver area.
The energy board is hearing oral summary arguments from interveners starting later this month and is scheduled to make its recommendations to the federal cabinet in May.
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On the markets, a slump in crude oil prices and other commodities weighed on stocks in afternoon trading Monday. Energy companies were among the biggest decliners as the price of crude oil sank to the lowest level in more than a decade. Investors also weighed the implications of another drop in China's stock market.
The market losses come after U.S. stocks posted their worst week in more than four years.
“Investors have one eye on China, and all that's going on there, and the other eye on oil,” said Erik Davidson, chief investment officer at Wells Fargo Private Bank. “Those two things are keeping investors on pins and needles right now.”
Benchmark U.S. crude shed $1.89, or 5.7 per cent, to $31.27 a barrel in New York. The last time it was lower was December 2003. Brent crude, a benchmark for international oils, fell $2.22, or 6.5 per cent, to $31.71 a barrel in London.
Several energy and mining companies slumped as crude oil and other commodity prices fell. Freeport-McMoRan (
NYSE:FCX,
Forum) sank 93 cents, or 17 per cent, to $4.5, making it the biggest decliner in the S&P 500 index. Consol Energy (
NYSE:CNX,
Forum) also slumped, losing 81 cents, or 10.6 per cent, to $6.88. NRG Energy (
NYSE:NRG,
Forum) shed $1.07, or 9.4 per cent, to $10.27.