Egypt's fuel debt is increasing
Egypt’s cash-strapped government owes foreign energy producers at least $3 billion, industry sources told Reuters, as cancelled oil import tenders and lengthening queues at petrol stations point to fresh strains on fuel supplies.
Economic turmoil since a popular uprising unseated Hosni Mubarak last year has stretched Egypt’s finances and inflated the premiums the state petroleum company pays for fuel. Traders say the number of firms supplying fuel to the Arab world’s most populous country has shrunk and repeated shortages have angered motorists and disrupted industry and agriculture.
The government denies any major problem, says it honours its energy contracts and plans to rein in state energy spending by ensuring costly subsidies on fuel only target the needy.But that reform is still mostly in the pipeline. Fuel traders remain reluctant to extend Egypt credit and figures advanced by industry executives for the amount owed by the state to foreign energy companies imply a severe payments crisis.
The bill owed to foreign producers in Egypt is “over $3 billion” said one oil executive, who declined to be named since it would jeopardize the firm’s future in Egypt. “Small producers are really suffering since some of the larger ones are sometimes able to market their own oil. It’s vital for them to have dollars from the oil as working capital,” the executive said. “It’s got worse again recently.”