Egypt hopes to start oil debt payments by year-end

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Egypt hopes to start repaying debts to oil firms within two months, a top state executive said on Monday while adding his firm was still in talks with the government, snowed under by other requests, on how and when exactly it could repay $6 billion.

“By hook or crook we will get them something fixed by the end of this year ... (in) two months maximum,” the chairman of state-run Egyptian General Petroleum Corporation (EGPC), Tarek El Molla, told Reuters in an interview.

Molla said EGPC was still making “the required business case” to the finance ministry and the central bank and that the government was in the “discussion phase” over repayment details as EGPC has to compete with other sectors for government funds.

“We have not reached a final date or final amount.”

Egypt has struggled to meet soaring energy bills caused by high subsidies on fuel products for its 85 million people.

It owes oil companies $6.2 billion, the petroleum minister said earlier this month.

The country has been delaying payments to oil and gas firms because political upheaval since the overthrow of President Hosni Mubarak in 2011 has battered its economy, frightening away tourists and investors, and cutting into tax revenues.

Some of the debts were incurred even before the 2011 revolt.

Authorities have repeatedly promised to repay arrears since the army toppled Islamist President Mohammad Mursi on July 3 and after oil-producing Gulf Arab states, which fiercely opposed to his Muslim Brotherhood, promised financial support to Egypt.

In the week after the army takeover, Saudi Arabia, Kuwait, and the United Arab Emirates pledged a combined $12 billion in grants, interest-free loans, and oil products.

Egypt’s finance minister said last month oil debt repayment was a complex issues as it could mean restructuring the entire oil sector, but said repayments would begin soon.

“The repayment is definitely our objective, it’s our priority,” said Molla, adding that “satisfying” foreign partners was essential for increasing production and adequately supplying the local market.

Molla said Egypt was targeting short-term investments to increase its refining capacity to 30 million tons by the end of the fiscal year in June, up from 27 million last year.

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