Egypt has paid $1.5 billion of its debt to foreign energy companies, the oil ministry said in a statement on Thursday. Egypt has delayed payments to oil and gas firms since a popular uprising ousted autocrat Hosni Mubarak in 2011 and brought on almost three years of instability. Some of the debts were incurred before the revolt.
The Arab world’s most populous country faces its worst energy crisis in decades. It still owes foreign energy firms $4.9 billion after this latest payment, which was financed by a loan from Egyptian banks, according to the statement. “The government aims to reduce the debt owed to partners in the oil sector to an appropriate level to motivate them to intensify research and exploration,” said Oil Minister Sherif Ismail. Egypt’s last payment to foreign energy companies was $1.5 billion made at the end of last December to oil majors including BP and BG Group.
At the time, BG Group was owed the most. It is unclear which companies will benefit from today’s payment. The oil ministry’s figures indicate that Egypt’s debt was at $6.4 billion immediately before this payment, up from the $5.9 billion reported at the end of April. That indicates Egypt has accumulated $500 million in fresh debt over the past five months.
Today’s $1.5 billion payment was financed through a 10 billion Egyptian pound loan from the National Bank of Egypt. “We moved 10 billion pounds to the account of (state oil company) EGPC, which included $550 million dollars,” Mahmoud Montasser, vice-president at the commercial bank, said in a telephone interview, saying it was the biggest such loan ever made in Egypt.
The oil minister said on Tuesday that Egypt would begin seeking a similar loan from international banks after next week’s Eid holiday. Gas production is steadily declining in Egypt while consumption keeps rising but firms are reluctant to increase investment after the government fell behind on payments.