Ammon News - Cairo (Asharq Al-Awsat) —Egypt continues to face a deteriorating fuel crisis with the capital, Cairo, particularly hard hit, resulting in long lines of cars queuing up in front of gas stations blocking traffic.

The Ministry of Petroleum initially dismissed the crisis as non-existent.

“What has been said about the shortage of oil, diesel, and other mineral materials is not true,” Sherif Hadarra, the minister of petroleum, was quoted as saying to the state-run MENA news agency.

However, Egyptian president Mohamed Mursi apologized for fuel shortages in a speech marking his first year in office. Mursi blamed the fuel crisis on unfounded media speculation and the illegal hoarding of fuel by some gas stations. Responding to the problems, the president announced a decision to withdraw the licenses of any gas station shown to be hoarding fuel. Mursi also ordered Egypt’s supply ministry to ensure that gas stations are operating “in the public interest.”

Speaking before the president’s speech, Egypt’s petroleum minister said that a technical problem in fuel supplies in Cairo led to delays in fuel reaching gas stations on Monday. He added that the problem will be solved by providing all gas stations with extra amounts of fuel “within days.”

However, a petroleum official, speaking to Asharq Al-Awsat on the condition of anonymity, said that the crisis had begun several months ago but worsened over the past few days, particularly in Cairo.

Dr. Hussam Arafat, head of the petroleum section in the Federation of Egyptian Chambers of Commerce (FEDCOC), confirmed that there is a fuel shortage in Egypt, adding that he had “warned against this crisis since March, but no one listened.”

Speaking exclusively to Asharq Al-Awsat, Arafat emphasized: “The government should take steps to solve the fuel crisis.”

Arafat added, “The crisis has been there for months. It eased in the capital and this has a political dimension given the unrest in Cairo and the government’s attempt to appease the public. As for the rest of provinces, they have suffered for a long time from the [crisis].”

In August the government will introduce a smart-card system to provide cars with fuel in hopes of combating smuggling and saving approximately EGP 35 billion (USD 5 billion). The new system will not ration fuel, however.

Arafat stressed that implementing a system that does not ration fuel will open the door to smugglers and increase fuel consumption in Egypt. He added that the government ended fuel rationing in a bid to woo the public.

Arafat confirmed that gas stations will not close on June 30 despite fears of thugs exploiting expected nation-wide protests to attack workers and illicitly obtain fuel to sell on in the black market.

Total governmental subsidies in the first nine months of the current financial year are estimated at EGP 98.4 billion (USD 14 billion), 62 percent of which (EGP 72.2 billion) went on petroleum products. The total energy subsidies will reach approximately EGP 100 billion next year with the ministry of petroleum demanding they be increased to EGP 120 billion.