CAIRO: Egypt’s government intends to repay a total of $4.9 billion debt owed to oil and gas foreign partners within six months, Ministry of Petroleum announced Saturday.
Egypt plans to borrow $2 billion to help provide the required finances for the repayments, seeking to pay back 60 percent of the arrears by the end of 2014, the statement read.
This step is aimed at encouraging foreign companies to boost exploration and production, in order to ease an energy shortage that has reached its worst level this summer with daily powers cuts that have lasted for 12 hours at a time in some areas.
Earlier in October, Egypt repaid $1.5 billion of the $6.4 billion owed. To arrange this payment, the Ministry of Petroleum arranged a loan from the National Bank of Egypt in collaboration with other local banks worth a total value of 10 billion EGP ($1.4 billion.)
Arshad Sufi, President of BG Egypt, a subsidiary of British Gas, welcomed the ministry’s steps to repay the oil partners’ arrears.
“This is a rapid and positive step from the government, indicating that that the oil sector along with the government are taking immediate steps to face the challenges the foreign companies are facing in Egypt,” Sufi said in an e-mailed statement to The Cairo Post Saturday.
Sufi added that the government’s efforts aimed at cutting subsidies and paying back foreign partners’ dues, which he deem as “motivating signs” for all international companies operating in Egypt.
In July, President Abdel Fatah al-Sisi raised fuel prices and cut energy subsidies in the new budget by 10 percent, saving around 44 billion EGP. The budget amounted to 100.3 billion EGP, compared to 144 billion EGP in the previous year.
The government plans to remove energy subsidies completely within three to five years, Minister of Finance Hani Kadry has said. The government is also negotiating new deals for natural gas exploration to meet growing demand, notably for running power plants.