Cairo, Reuters—Egypt is looking to borrow at least 1.5 billion US dollars from local and international banks in order to repay debt owed to foreign oil companies operating in the country, Oil Minister Sherif Ismail told Reuters on Sunday.
Egypt wants to repay money it owes international firms as part of a scheme seeking to revive confidence in the economy after years of turmoil following the popular uprising that ousted president Hosni Mubarak in February 2011.
Ismail said paying the debt will open the door to foreign investment. He said Egypt owed around 5.9 billion dollars to foreign oil firms as of the end of June.
The minister gave no details on which banks would be approached but said Egypt wanted to borrow money so as not to put pressure on reserves at the country’s central bank, which has provided funds for debt payments this year.
“We’ll pay part of the debt in August and schedule the rest,” he said.
The country has previously said it would repay 3 billion dollars in monthly instalments until 2017 as an incentive to encourage foreign oil companies to increase exploration and production.
The government’s ability to pay oil companies and contractors has been hit by the political upheaval, which has disrupted investment and tourism and cut tax revenues.
Egypt produced 5.1 billion cubic feet per day (cfd) of gas and 675,000 barrels of oil per day (bpd) during 2013–2014, Ismail said, and was targeting 5.4 billion cfd of gas and 695,000 bpd for 2014–2015.
Egypt is also experiencing its worst energy crisis in decades due to a continued decline in gas production.
Ismail said a much-delayed tender put out in October for a floating terminal needed to import liquefied natural gas (LNG) will be finalized by the end of August.
The country is “in the process of hiring a ship [floating terminal]. We are in the final stages and will complete the contract before the end of August.
“The vessel will arrive in December and also we have to import the first shipment of liquefied gas during the same month,” he said.
He said Egypt will also open a tender during August to import gas from abroad to ensure the needs of the country are met without problems.
Egypt has been struggling to meet soaring energy bills caused by high subsidies on fuel products for its 85 million people, most of whom are poor.
Last month it slashed energy subsidies, pushing up prices by more than 70 percent.
Failure to find a solution to the energy crisis could frustrate Egyptians, who rioted over long lines at petrol pumps just before the army toppled Islamist president Mohamed Mursi in July 2013.