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The Legal Framework for the Recent

The Legal Framework for the Recent Increase in Prices
In July 2014, the President issued a series of laws reducing the subsidiary from the State budget for energy products; this was followed by several resolutions issued by the Government related to the increase of the State’s resources in order to reduce the deficit in the public budget. These decrees are summarized below:
Increasing the General Sales Tax on Some Products
On 2 July 2014, the President issued Decree No. 58 of 2014 rescinding Decree No. 102 of 2012 amending certain provisions of the Law on the General Sales Tax No. 11 of 1991 (the "Law").[1] The text of the amendment sets out the sales tax for alcoholic beer at a rate of 200% and a minimum of EGP 400 per hectoliter, regardless of whether the product is imported or domestic. This doubles the previous tax rate of 100% with a minimum of EGP 200 per hectoliter. Regarding cigarettes, the tax payable remains 50% of the retail price paid by the consumer. However, a charge of EGP 1.75 is levied on all cigarette packs with a retail price of less than EGP 9.00, a charge of EGP 2.25 if the retail price is between EGP 9.00 and 15.00, and a charge of EGP 2.75 if the retail price exceeds EGP 15.00; this applies to all cigarette products, imported or domestic. The sales tax payable on cigarettes before the issuance of this Law was 50% of the retail price in addition to EGP 1.25 on all cigarette packs. The new system of different “tax bands” eliminates the need for a higher tax, instead increasing the value of each pack of cigarettes which de facto results in a higher amount of tax retrieved by the State. In addition, the Law stipulates a 150% tax and a minimum of EGP 15.00 on wine products, alcoholic drinks and alcoholic beverages sweetened, scented, or distilled. Again this applies to all such products, imported or domestic. The previous tax rate was set at 100% of retail price. Finally, the Law serves to repeal Presidential Decree No 102 of 2012, which was notable in that it was issued in the last days of 2012 by former President Mohamed Morsi. The Decree was greeted with widespread public anger which led to the issuance of a subsequent decision by President Morsi suspending the effects of the Decree but without officially repealing it. As such, this Law has been pending for a long time in an attempt to resolve this matter. The final Article of the decree requires publication in the Official Gazette and implementation by the next working day; in this case, 3 July, 2014.
Taxi Tariff Increase
On 6 July 2014, the Governor of Giza issued Decision No. 12764 of 2014 to amend tariffs for taxis.[2] The basic fee charged for riding a taxi has been increased from EGP 2.50 pounds to EGP 3.00, while the price per kilometer has increased from EGP 1.25 to EGP 1.40. Regarding fees for waiting for clients, the first hour’s wait has been increased from EGP 10.00 to EGP 12.00, with EGP 6.00 to be charged for every extra hour thereafter. The decision was published in the Official Gazette and is applicable from the date of publication, 26 July 2014. Other Governorates must have issued similar Resolution, but these have not been published in the Official Gazette.
Increase in the Price of Diesel Fuel
On 3 July 2014, the Prime Minister issued Decree No. 1159 of 2014 determining the selling price of diesel of a regular specification.[3] The Resolution sets out the following diesel prices:
  • An increase from EGP 1000 to EGP 1400 per ton of diesel delivered to the consumer for food industry as determined by the Minister of Industry and Commerce’s decision;
  • A price of EGP 2300 per ton of diesel delivered to companies that produce electricity under the Ministry of Electricity;
  • A price of EGP 1950 per ton of diesel delivered to distribution depots and brick kilns (prior to this Resolution the price per ton was EGP 1620, excluding transportation costs);
  • A price of EGP 1950 per ton of diesel for delivery to the rest of the sectors and agencies and other uses (prior to this Resolution the price per ton was set at EGP 1500);
  • And finally a price of EGP 2250 per ton of diesel delivered to distribution depots of the cement industry;
The final Article of the decree requires publication in the Official Gazette and implementation by the next working day; in this case, 5 July, 2014. Increase in the Prices of Gasoline, Kerosene and Diesel Fuel On 3 July 2014, the Prime Minister issued Decree No. 1160 of 2014 amending the prices of gasoline, kerosene, and diesel fuel products as follows:[4]
  • Increase in the price of a liter of petrol “80” from EGP 90 to EGP 1.60;
  • Increase in the price of a liter of petrol “92” from EGP 1.85 to EGP 2.60;
  • Increase in the price of a liter of petrol “95” from EGP 5.85 to EGP 6.25;
  • Increase in the price of a liter of kerosene from EGP 0.57 to EGP 1.80;
  • Increase in the price of a liter of diesel from EGP 1.10 to EGP 1.80.
The final Article of the decree requires publication in the Official Gazette and implementation by the next working day; in this case, 5 July, 2014.
Increase in the Price of Natural Gas
On 3 July 2014, the Prime Minister issued Decree No. 1161 of 2014 increasing the price of natural gas used as fuel for cars from EGP 0.45 to EGP 1.10 per cubic meter.[5] In addition, the Prime Minister, in the same issue of the Official Gazette, issued Resolution No 1162 of 2014 setting out increases the selling prices of natural gas. The selling price of natural gas used for the generation of electricity has increased to USD 3.00 per million British thermal units for companies of the Ministry of Electricity. The selling price of natural gas used for the manufacture of fertilizers and petrochemicals has increased to USD 4.50, USD 7.00 for natural gas used for the iron, steel, aluminum, copper, ceramics, porcelain and flat glass industries, and USD 8.00 for natural gas used for the cement industry. Finally, the price of natural gas used for the food, textile, pharmaceutical, and engineering industries, brick kilns, and other industries has been increased to USD 5.00. In addition to the above-mentioned increases, a rise in the price of natural gas used in homes and commercial activity has been approved, resulting in prices of EGP 0.40 per cubic meter if consumption of natural gas does not exceed 25 cubic meters, EGP 1.00 for consumption between 25 and 50 cubic meters, and EGP 1.50 for consumption exceeding 50 cubic meters. The final Article of the decree requires publication in the Official Gazette and implementation by the next working day; in this case, 5 July 2014.
Increase in Electricity Prices
On 17 July 2014, the Prime Minister issued Decree No. 1257 of 2014 increasing the selling prices of electric power gradually over the next five years, according to five tables annexed to the Resolution, detailing the tariffs for each of those years.[6] The final Article of the decree requires publication in the Official Gazette and for the decree to be considered in force from the 1 July 2014.   [1] Presidential Decree-Law No. 58/2014 rescinding Decree No. 102/2012 amending certain provisions of the General Sales Tax Law, Official Gazette, Issue No. 26 (bis) (c), 2 July 2014. [2] Governorate of Giza’s Decision No. 12764/2014 amending tariffs for taxis, Egyptian Gazette, Issue No. 170, 26 July 2014. [3] Prime Minister’s Decree No. 1159/2014 determining the selling price of diesel of a regular specification, Official Gazette, Issue No. 27 (cont.), 3 July 2014. [4] Prime Minister’s Decree No. 1160/2014 amending the prices of gasoline, kerosene, and diesel fuel products, Official Gazette, Issue No. 27 (cont.), 3 July 2014. [5] Prime Minister’s Decree No. 1161/2014 increasing the price of natural gas used as fuel for cars, Official Gazette, Issue No. 27 (cont.), 3 July 2014. [6] Prime Minister’s Decree No. 1257/2014 increasing the selling prices of electric power gradually over the next five years, Official Gazette, Issue No. 29 (cont.), 17 July 2014.
In July 2014, the President issued a series of laws reducing the subsidiary from the State budget for energy products; this was followed by several resolutions issued by the Government related to the increase of the State’s resources in order to reduce the deficit in the public budget. These decrees are summarized below:
Increasing the General Sales Tax on Some Products
On 2 July 2014, the President issued Decree No. 58 of 2014 rescinding Decree No. 102 of 2012 amending certain provisions of the Law on the General Sales Tax No. 11 of 1991 (the "Law").[1] The text of the amendment sets out the sales tax for alcoholic beer at a rate of 200% and a minimum of EGP 400 per hectoliter, regardless of whether the product is imported or domestic. This doubles the previous tax rate of 100% with a minimum of EGP 200 per hectoliter. Regarding cigarettes, the tax payable remains 50% of the retail price paid by the consumer. However, a charge of EGP 1.75 is levied on all cigarette packs with a retail price of less than EGP 9.00, a charge of EGP 2.25 if the retail price is between EGP 9.00 and 15.00, and a charge of EGP 2.75 if the retail price exceeds EGP 15.00; this applies to all cigarette products, imported or domestic. The sales tax payable on cigarettes before the issuance of this Law was 50% of the retail price in addition to EGP 1.25 on all cigarette packs. The new system of different “tax bands” eliminates the need for a higher tax, instead increasing the value of each pack of cigarettes which de facto results in a higher amount of tax retrieved by the State. In addition, the Law stipulates a 150% tax and a minimum of EGP 15.00 on wine products, alcoholic drinks and alcoholic beverages sweetened, scented, or distilled. Again this applies to all such products, imported or domestic. The previous tax rate was set at 100% of retail price. Finally, the Law serves to repeal Presidential Decree No 102 of 2012, which was notable in that it was issued in the last days of 2012 by former President Mohamed Morsi. The Decree was greeted with widespread public anger which led to the issuance of a subsequent decision by President Morsi suspending the effects of the Decree but without officially repealing it. As such, this Law has been pending for a long time in an attempt to resolve this matter. The final Article of the decree requires publication in the Official Gazette and implementation by the next working day; in this case, 3 July, 2014.
Taxi Tariff Increase
On 6 July 2014, the Governor of Giza issued Decision No. 12764 of 2014 to amend tariffs for taxis.[2] The basic fee charged for riding a taxi has been increased from EGP 2.50 pounds to EGP 3.00, while the price per kilometer has increased from EGP 1.25 to EGP 1.40. Regarding fees for waiting for clients, the first hour’s wait has been increased from EGP 10.00 to EGP 12.00, with EGP 6.00 to be charged for every extra hour thereafter. The decision was published in the Official Gazette and is applicable from the date of publication, 26 July 2014. Other Governorates must have issued similar Resolution, but these have not been published in the Official Gazette.
Increase in the Price of Diesel Fuel
On 3 July 2014, the Prime Minister issued Decree No. 1159 of 2014 determining the selling price of diesel of a regular specification.[3] The Resolution sets out the following diesel prices:
  • An increase from EGP 1000 to EGP 1400 per ton of diesel delivered to the consumer for food industry as determined by the Minister of Industry and Commerce’s decision;
  • A price of EGP 2300 per ton of diesel delivered to companies that produce electricity under the Ministry of Electricity;
  • A price of EGP 1950 per ton of diesel delivered to distribution depots and brick kilns (prior to this Resolution the price per ton was EGP 1620, excluding transportation costs);
  • A price of EGP 1950 per ton of diesel for delivery to the rest of the sectors and agencies and other uses (prior to this Resolution the price per ton was set at EGP 1500);
  • And finally a price of EGP 2250 per ton of diesel delivered to distribution depots of the cement industry;
The final Article of the decree requires publication in the Official Gazette and implementation by the next working day; in this case, 5 July, 2014. Increase in the Prices of Gasoline, Kerosene and Diesel Fuel On 3 July 2014, the Prime Minister issued Decree No. 1160 of 2014 amending the prices of gasoline, kerosene, and diesel fuel products as follows:[4]
  • Increase in the price of a liter of petrol “80” from EGP 90 to EGP 1.60;
  • Increase in the price of a liter of petrol “92” from EGP 1.85 to EGP 2.60;
  • Increase in the price of a liter of petrol “95” from EGP 5.85 to EGP 6.25;
  • Increase in the price of a liter of kerosene from EGP 0.57 to EGP 1.80;
  • Increase in the price of a liter of diesel from EGP 1.10 to EGP 1.80.
The final Article of the decree requires publication in the Official Gazette and implementation by the next working day; in this case, 5 July, 2014.
Increase in the Price of Natural Gas
On 3 July 2014, the Prime Minister issued Decree No. 1161 of 2014 increasing the price of natural gas used as fuel for cars from EGP 0.45 to EGP 1.10 per cubic meter.[5] In addition, the Prime Minister, in the same issue of the Official Gazette, issued Resolution No 1162 of 2014 setting out increases the selling prices of natural gas. The selling price of natural gas used for the generation of electricity has increased to USD 3.00 per million British thermal units for companies of the Ministry of Electricity. The selling price of natural gas used for the manufacture of fertilizers and petrochemicals has increased to USD 4.50, USD 7.00 for natural gas used for the iron, steel, aluminum, copper, ceramics, porcelain and flat glass industries, and USD 8.00 for natural gas used for the cement industry. Finally, the price of natural gas used for the food, textile, pharmaceutical, and engineering industries, brick kilns, and other industries has been increased to USD 5.00. In addition to the above-mentioned increases, a rise in the price of natural gas used in homes and commercial activity has been approved, resulting in prices of EGP 0.40 per cubic meter if consumption of natural gas does not exceed 25 cubic meters, EGP 1.00 for consumption between 25 and 50 cubic meters, and EGP 1.50 for consumption exceeding 50 cubic meters. The final Article of the decree requires publication in the Official Gazette and implementation by the next working day; in this case, 5 July 2014.
Increase in Electricity Prices
On 17 July 2014, the Prime Minister issued Decree No. 1257 of 2014 increasing the selling prices of electric power gradually over the next five years, according to five tables annexed to the Resolution, detailing the tariffs for each of those years.[6] The final Article of the decree requires publication in the Official Gazette and for the decree to be considered in force from the 1 July 2014.   [1] Presidential Decree-Law No. 58/2014 rescinding Decree No. 102/2012 amending certain provisions of the General Sales Tax Law, Official Gazette, Issue No. 26 (bis) (c), 2 July 2014. [2] Governorate of Giza’s Decision No. 12764/2014 amending tariffs for taxis, Egyptian Gazette, Issue No. 170, 26 July 2014. [3] Prime Minister’s Decree No. 1159/2014 determining the selling price of diesel of a regular specification, Official Gazette, Issue No. 27 (cont.), 3 July 2014. [4] Prime Minister’s Decree No. 1160/2014 amending the prices of gasoline, kerosene, and diesel fuel products, Official Gazette, Issue No. 27 (cont.), 3 July 2014. [5] Prime Minister’s Decree No. 1161/2014 increasing the price of natural gas used as fuel for cars, Official Gazette, Issue No. 27 (cont.), 3 July 2014. [6] Prime Minister’s Decree No. 1257/2014 increasing the selling prices of electric power gradually over the next five years, Official Gazette, Issue No. 29 (cont.), 17 July 2014.