Egypt's Ministry of Transport hiked Cairo's metro fares by up to 250% in a sudden move that angered more than 3 million Egyptian commuters. The decision adds to the already high costs of living amid recent austerity measures taken as part of a $12 billion IMF loan agreement signed in 2016.
Effective May 11, the base fare will be 3 Egyptian pounds ($0.17) for up to nine stops, 5 pounds ($0.28) for 10-16 stops and 7 pounds ($0.39) for more than 16 stops. The increase will not affect students, the elderly and people with special needs. The ministry had previously raised the fare from 1 to 2 pounds for an unlimited number of stops in March 2017.
The metro fares and the expected third round of energy subsidy cuts in July will burden Egyptians who have already been hit hard since Egypt floated its currency in late 2016. The inflation rate reached a record high after the government lifted fuel subsidies in July last year for the second time.
The Ministry of Transport announced May 10 that higher fares were needed to keep the metro running and to finance improvements and extensions that aim to serve more people in the capital. It explained that the Egyptian Company for Metro Management and Operation (ECMO) is suffering a heavy budget deficit.
Cairo’s metro was established in 1987 as an independent body that is part of Egyptian National Railways, which operates under the Ministry of Transport. In April 2003, the government established the ECMO to operate the metro. Neither ECMO nor the Transport Ministry share their full financial information with the public.
The Ministry of Transport is currently working on completing its third line and building the fourth, fifth and sixth lines to cover most of the Greater Cairo area, all at a cost of 200 billion pounds (about $11.2 billion).
More than 3 million Egyptians ride the metro daily, many of them from Cairo’s suburbs and other nearby governorates and villages who use it to reach their jobs inside the capital.
The cost hike sparked small protests inside some metro stations. On May 12, dozens gathered in Helwan, Maadi and Sadat metro stations to protest the higher fares. Some tried to halt the metro, while others chanted slogans against the cost raise. There were calls on social media for a general strike.
At least 21 people were arrested following the protests on charges of unlawful assembly, damaging a public facility and assaulting government officials, according to the Association for Freedom of Thought and Expression. On May 15, 10 detainees were released.
“It is a huge and unfair increase,” economic journalist Mohamed Gad told Al-Monitor, adding that it will particularly affect the underprivileged and poor classes that depend on the metro as the cheapest means of transportation.
“The decision will significantly affect people who come from Cairo’s suburbs and nearby villages every day to reach their work inside the capital. Those people left their hometown and traveled long distances in order to find job opportunities,” said Gad. “How can they pay higher fares?” He went on, “The government is also expected to remove fuel subsidies in July for the third time. Such measures will lead to another increase in fares that the poor cannot afford.”
Gad agreed that the metro’s budget deficit and losses have to be addressed to ensure the continuity of the service, but he said that the government could do so in other ways. “It usually makes decisions that only serve the rich classes while burdening the poor classes,” he said, noting, “The government could use the capital gains tax to cover the expenses needed to improve public services, such as public transportations and facilities.” In March 2017, the government extended the freeze on the capital gains tax for three years.
Gad further questioned whether ECMO has to make a profit. “It is a subsidized service that gets funding from the state budget, and it is supposed to serve the people who really need it.”
Egyptian President Abdel Fattah al-Sisi defended the increase, saying that the cost of repairing and improving the Helwan line alone costs 30 billion pounds ($1.7 billion). Plans to start working on this line are scheduled for 2019. Sisi said during the Fifth National Youth Conference on May 16 that increasing metro fares was needed to improve and maintain the service and can no longer be postponed.
“There are other ways to maximize the metro’s revenues than increasing fares,” Rifaat Arafat, the former head of the independent syndicate for metro laborers, told Al-Monitor, noting that the ECMO does not publish its actual budget.
“The Transport Ministry raised the fares in March 2017. Why did they not wait [longer] to observe the results before implementing another, bigger increase?” he asked.
Arafat had prepared a study in 2014 on how to increase subway revenues and offset losses and provided his findings to the Ministry of Transport, but they not been applied because the ECMO “did not benefit,” he said.
“The study suggested establishing an independent national body to run the metro apart from the bureaucratic system of the Egyptian National Railway that would be linked directly to the Ministry of Transport or to the Cabinet,” said Arafat, adding, “This would have save huge amounts that are spent on the current metro system.”
Arafat further suggested that the ministry could capitalize on large spaces in the metro’s 64 stations with advertising on station walls, on metro cars and even on the backs of tickets. “The ministry could target small and large firms that are interested in promoting their products or services in places where millions of people can see them every day.”