Fuel cards improve subsidy system, reduce smuggling in Cairo

A newly-launched chip-and-pin scheme for fuel purchases in Egypt is playing a key part in the roll out of the country’s long-awaited and ambitious subsidy reform program, bringing the concepts and technology behind electronic payments to the fore, a report by the global publishing, research and consultancy firm Oxford Business Group (OBG) said. Ibrahim Sarhan, the Chairman and Managing Director of E-Finance, told OBG that the smart card system would eventually improve subsidy distribution, reduce fuel smuggling and create a unified, accurate database of fuel users, both corporate and individual. Sarhan explained that under the new system, all vehicle owners, both individuals and businesses, can use their card to purchase any amount of fuel at a subsidized rate. “We have already distributed more than 2,000,000 cards and expect to distribute the rest over the coming months,” he said. The smart card system, which is being managed by e-Finance, under the Ministry of Finance and in cooperation with the Ministry of Petroleum, should pave the way for further subsidy reforms, as Egypt looks to drive down the country’s fiscal bill. Fuel subsidies alone currently cost the government over EGP 140 billion (EUR 14.68 billion). Sarhan acknowledged that the smart card system still needs work, particularly in the area of data collection. He was confident, however, that the introduction of e-programs would be instrumental in improving efficiency across areas of government. The smart card system is one of a number of efforts to improve fiscal clarity and streamline spending. E-Finance is also currently running the EFMIS (Egyptian financial management information system), which includes electronic payment and collection from and to the government as well as between government agencies, in line with the World Bank guidelines concerning IFMIS (integrated financial management systems). The Egypt 2013 Report has been produced with research assistance from the General Authority for Investment and Free Zones, HC Securities, Deloitte and Helmy, Hamza & Partners.