Egypt can't repay oil and gas debts by end 2016: PM
Egypt's PM hopes that the debt will “at least [be reduced] to a very reasonable” level by the end of year. (Shutterstock)
Egypt may miss its target of repaying the $3 billion (Dh11 billion) it owes to foreign oil and gas companies by the end of 2016, the Egyptian Prime Minister said on Tuesday.
Sharif Esmail told reporters in Dubai lower oil and gas revenues mean the debt will “at least [be reduced] to a very reasonable” level by the end of year.
This would not be the first time the government has pushed backed the deadline. It previously said it would repay its arrears by mid-2015, then it said by mid-2016 before again pushing the target back to the end of the year.
The Prime Minister declined to offer a new target date and instead said the government is sticking with its end of year deadline despite raising doubts over whether it remains reachable.
“Our objective is to finalise this by the end of this year,” Esmail said at the World Government Summit.
The Egyptian government has halved the amount owed to foreign oil and gas companies to around $3 billion dollars from $6.3 billion two years ago, Esmail said.
Egypt delayed payments to oil and gas firms as its economy was battered after the popular uprising against long time President Hosni Mubarak in 2011. But an increase in what is paid for domestic production and a commitment to pay back the arrears last year has encouraged foreign firms to once again invest in the country’s hydrocarbon sector.
In March 2015, the United Arab Emirates private energy company Dana Gas said it believed it could recover the $185 million owed by the government by the end of 2016. However, at that time global oil benchmark Brent crude was trading at $57.07 a barrel. On Tuesday it was trading at more than $20 lower at $33.13 a barrel.
Egypt’s parliament will start reviewing a bill to introduce value added tax (VAT) later this month, Esmail also said on Tuesday, adding that he expects the bill to be ratified and come into law in the second quarter of 2016. The introduction of VAT is part of a series of major economic reforms the country’s President, Abdul Fattah Al Sissi, hopes will help turn around the country’s troubled economy.
By Alexander Cornwell
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