(MENAFN- The Peninsula) Egypt plans to repay all of its $4.9bn debt to foreign oil and gas companies within six months, the oil ministry said yesterday, a move it hopes will prompt them to boost exploration and ease the worst energy crunch in decades.
Egypt has delayed payments to oil and gas firms as its economy has been hammered by almost three years of instability since a popular uprising ousted Hosni Mubarak.
Arrears began to accumulate before the revolt, but worsening state finances saw the debts mount to billions of dollars while the government diverted gas earmarked for export to meet domestic demand.
Gas production has steadily declined in Egypt while consumption keeps rising, but firms have been reluctant to increase investment in exploration and production, particularly in costly offshore areas, until the government repays them.
The ministry said in a statement that Egypt planned to borrow $2bn to help it finance the repayments, seeking to repay 60 percent of the arrears by year-end. "This offering comes as one of the short-term measures taken by the government to pay the (international oil companies') arrears," Oil Minister Sherif Ismail said in the statement.
He said state oil and gas boards EGPC and EGAS were holding further talks with the companies, in parallel with repayments, to "manage their expectations".
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