Egypt Begins Repayment of Dues to Foreign Oil and Gas Companies
Egypt has kicked off the process of paying off debts owed to foreign oil and gas companies operating within the country, the government announced on Tuesday. Sources reveal that a whopping $1.5 billion has been allocated for these payments.
Payment Plan in Motion
According to a statement from the cabinet, the payment process has already commenced, covering approximately 20 percent of the total arrears owed to the companies. The remaining amount will be settled through a structured payment plan.
Foreign Currency Shortage Woes
Egypt found itself accumulating debts to companies and contractors due to a prolonged foreign currency shortage. However, the situation has shown signs of improvement in recent weeks following the announcement of a groundbreaking investment deal, currency devaluation, and expansion of Egypt’s IMF program.
Anticipated Payments
Sources within the oil industry have revealed that Egypt has notified at least one company of its intention to begin repaying up to $1.5 billion of the outstanding arrears as early as Tuesday. Another industry source disclosed that a sum of $1.5 billion has been earmarked for oil companies’ receivable payments, with plans to settle 20 percent of their overdue receivables.
Financial Updates
Despite the chronic foreign currency shortage, recent developments have injected hope into Egypt’s economy. A $10 billion investment deal with UAE sovereign fund ADQ and an expanded $8 billion financial support package with the IMF have provided a much-needed boost. Additional financing from the World Bank and the EU is also on the horizon.
Historical Debt Repayment
While the exact amount owed to companies remains undisclosed, Egypt had accumulated significant arrears to foreign oil companies a decade ago. Efforts to repay these debts began after a devaluation and IMF agreement in 2016.