CAIRO: Egypt will pay $300 million of the money it owes to foreign oil companies in Egyptian pounds, a Finance Ministry statement said, as part of a $1.5-billion repayment scheme designed to revive confidence in its economy battered by years of turmoil. Egypt has announced it would repay a further $3 billion of the $6.3 billion it says it owes to foreign oil companies operating in the country in monthly installments until 2017, hoping this will encourage investment in the energy sector.
Egypt’s foreign currency reserves, which stood at $36 billion before autocrat Hosni Mubarak was ousted in 2011, have been under pressure ever since and fell to $17.8 billion in November from $18.6 billion in October.
Repayment will occur “in phases,” starting on Dec. 1, a statement on the Finance Ministry website said. Prime Minister Hazem al-Beblawi said on Dec. 4 the repayment of $1.5 billion had been approved.
This amount will be paid in three tranches, according to the Finance Ministry. It added the agreement between the Finance and Oil Ministries had been reached with the “full coordination and cooperation” of the Central Bank, which helped provide the foreign currency needed for the payments.
The first tranche of $1 billion will be provided by the Central Bank, which will deduct the amount in Egyptian pounds from its Finance Ministry accounts, according to the statement.
The second tranche of $300 million will be paid for by the Finance Ministry in Egyptian pounds. The state-run Egyptian General Petroleum Corporation will pay the remaining $200 million, the ministry said.
Financial disclosures by firms including BP, BG Group, Edison SpA and TransGlobe Energy show Egypt owed them more than $5.2 billion at the end of 2012.
In the week after the army removed Islamist President Mohammad Morsi in July following mass protests against his rule, Saudi Arabia, Kuwait and the United Arab Emirates have promised Egypt a total of $12 billion in grants, interest-free loans and oil products.