Egypt begins repaying $1.5 billion to foreign companies

Egypt has begun the process of repaying the $1.5 billion in dues it owes to foreign oil and gas companies operating in the country.

The government has announced that it has already started the payment process, which accounts for about 20% of the arrears owed to the companies. The remaining amount will be paid off through a scheduled plan.

This move comes as Egypt seeks to address the arrears it has accumulated to companies and contractors due to a long-running foreign currency shortage.

The shortage has started to ease over the past month following a series of measures, including the announcement of a record investment deal, a devaluation of the currency, and an expansion of Egypt’s current International Monetary Fund (IMF) program.

According to sources, Egypt has informed at least one of the companies that it will start repaying up to $1.5 billion of the overall arrears as soon as Tuesday.

Another industry source has confirmed that $1.5 billion has been set aside for oil co-receivable payments, with the intention of paying each company 20% of their overdue receivables.

There is anticipation that some companies will receive this payment today, as stated by the industry source. This news comes as a relief to the foreign oil and gas companies operating in Egypt, who have been waiting for the government to address its arrears.

The repayment of these dues is a positive development for both the companies and Egypt as a whole. It demonstrates the government’s commitment to resolving its outstanding financial obligations and restoring confidence in Egypt as an investment destination.

Foreign companies that have been operating in Egypt will benefit from the repayment, as it will alleviate their financial stress and enable them to continue their operations smoothly.

Furthermore, this payment is expected to have a positive impact on Egypt’s overall business environment. It will enhance the country’s reputation as a reliable and attractive investment destination, encouraging more foreign companies to consider investing in Egypt.

This will lead to increased job opportunities, improved economic growth, and greater stability in the energy sector.

Egypt’s efforts to repay its arrears to foreign oil and gas companies are a reflection of its commitment to strengthening its economy and attracting foreign investment.

The recent measures taken by the government, such as the investment deal, currency devaluation, and IMF program expansion, have already shown signs of success in stabilizing the country’s financial situation.

Egypt’s finance and petroleum ministries have not yet responded to requests for comment on the current situation.

The country has been facing a chronic foreign currency shortage since the beginning of 2022, which has led to the implementation of certain restrictions on imports and government payments.

In an effort to address this issue, Egypt recently announced a deal with the UAE sovereign fund ADQ, through which it has received $10 billion of the proposed $24 billion.

This money will be used for the development of prime land at Ras El Hekma, located on the Mediterranean coast. Additionally, the government has agreed on an expanded financial support package worth $8 billion with the IMF on March 6.

They have also secured pledges of additional financing from the World Bank and the European Union. The exact amount of money owed to companies by the government has not been disclosed.

However, it is worth mentioning that Egypt had accumulated significant arrears to foreign oil companies around a decade ago. These arrears started being paid off after a devaluation of the currency and an IMF deal was made in 2016.