Saudi Arabia gives Egypt fuel gift worth $3 billion

Saudi King Abdullah backed Egypt
Saudi King Abdullah backed Egypt's military coup against elected president Mohamed Morsi
Saudi Arabia is giving away $3 billion worth of ‘fuel donations’ to the military-installed government in Egypt over four months as part of a financial lifeline from Persian Gulf Arab regimes to ease the energy crisis in the embattled country that has killed and jailed thousands of protesters following the military-ouster of freely-elected president Mohamed Morsi last July.

Tarek el-Molla, who heads the state-run Egyptian General Petroleum Corp (EGPC), said on Sunday that Egypt had received an oil shipment from Saudi Arabia "at a value of between $650 and $700 million" in April and would keep getting the same amount monthly through August.

"Saudi petroleum aid to Egypt will be more than $3 billion from April until the end of August," he said, as quoted in a Reuters report.

El-Molla did not specify whether this huge financial grant came on top of the $2 billion worth of petrol product donations announced by Saudi Arabia last year after the Egyptian military deposed Morsi.

The military-led government in Cairo said last week that gifted fuel from Persian Gulf kingdoms including Saudi Arabia, which backed the military coup against Morsi last July, totaled $6 billion.

The supply is a welcome relief for Cairo as it struggles to avoid major blackouts this summer. The cuts are caused by gas shortages and a dilapidated power grid but are more broadly driven by a wasteful subsidies system that drains foreign exchange reserves.

The fuel gift from the Persian Gulf regimes can be used at some power stations as an alternative to gas, the main fuel used for electricity generation in Egypt.

Experts, however, say severe gas shortage guarantees a substantial megawatt shortfall that will cause major blackouts and strain a power grid already badly in need of renovation.

This is while power cuts deepened discontent against Morsi in the run-up to his ouster last July. Last year, extra supplies of liquefied natural gas from former ally Qatar helped ease the burden.

Other Persian Gulf countries who were opposed to Morsi and the Brotherhood, including Saudi Arabia, have since come out in support of presidential frontrunner and former army chief Abdel Fattah al-Sisi.

Raising energy prices, which are among the lowest in the world, could trigger unrest in the African country.

Failing to ease the subsidies will continue to prevent economic growth, experts and government officials say.

MB/MB