Egypt’s central bank has delivered $1 billion to the Ministry of Petroleum to repay part of the state’s debt to foreign oil companies, according to a report.
Egypt pledged last week to pay $300 million of the money it owed to foreign oil companies in Egyptian pounds starting from December as part of a $1.5 billion repayment scheme designed to revive confidence in its economy after years of turmoil.
The country also said it would repay a further $3 billion of the $6.3 billion it says it owed foreign oil companies operating in the country in monthly instalments until 2017.
“The central bank has transferred on Thursday $1 billion to the petroleum ministry to pay the late debts of oil foreign companies and the ministry of petroleum will tomorrow pay the foreign companies,” central bank governor Hisham Ramez told Reuters.
Egypt is trying to encourage foreign oil companies to increase exploration and production in the country in exchange for a more rapid repayment of the money it owes them.
The country has been struggling to meet soaring energy bills caused by high subsidies on fuel products for its 85 million population.
The government’s ability to pay oil companies and contractors was hit after the popular uprising that ousted president Hosni Mubarak in early 2011 affcted tourism and investment and cut tax revenue.
Financial disclosures by firms including BP, BG Group, Edison and TransGlobe Energy show Egypt owed them more than $5.2 billion at the end of 2012.
Political turmoil has intensified since the army overthrew president Mohamed Mursi of the Muslim Brotherhood in July.
Egypt’s foreign currency reserves, which stood at $36 billion before Mubarak was ousted in 2011, have been under pressure since then. They fell to $17.8 billion in November from $18.6 billion in October, Reuters reported.
Since the removal of Mursi, Saudi Arabia, Kuwait and the United Arab Emirates promised Egypt a total of $12 billion in grants, interest-free loans and oil products.