Thursday 24 April 2014
 
»
 
»
$6.3bn OIL ARREARS

Egypt govt pens energy debt payoff deal

Cairo, December 7, 2013

Egypt's army-installed government has unveiled a timetable to pay $3 billion of $6.3 billion it owes to foreign oil firms, part of a campaign to revive confidence in an economy hammered by three years of political turmoil.

Five months after President Mohamed Mursi's downfall and following a fierce crackdown on his Muslim Brotherhood, the government is trying to restore a semblance of normalcy by moving ahead with a political roadmap and boosting the economy.

But criticism of the army-backed authorities has spread recently to include secular activists angered at government moves seen as a threat to political freedoms won by the 2011 uprising against president Hosni Mubarak.

On Thursday, prosecutors ordered three dissidents to stand trial over protests ignited by a law that severely restricts the right to demonstrate. They include Ahmed Maher, one of the symbols of the 2011 uprising, who faces charges including protesting without official permission.

Saying the country needed to be spared more instability, the hardline Islamist Nour Party urged Egyptians to approve a new constitution in a referendum that is an important milestone in the political roadmap. Nour backed Mursi's ouster.

The government has pointed to the approaching referendum as proof of political progress it hopes will propel the economy of Egypt, whose instability worries the West because of its peace treaty with Israel, proximity to Europe and control of the Suez Canal, the shortest sea trade route between Asia and Europe.

Cairo aims to revive investment in the crucial energy sector by paying off debts to foreign firms that extract its oil and gas. Egypt's finances have been buoyed by $12 billion in financial aid from Saudi Arabia, Kuwait and the United Arab Emirates - states deeply hostile to the Muslim Brotherhood.

Under a timetable announced on Thursday, the government will pay off $3 billion of the debt to foreign firms in monthly instalments until December 2017, the state news agency said.

Arrears of $1.5 billion will be paid straight away, it said, following the government's announcement on Wednesday of final approval of that sum. The government is in talks to agree a timetable to repay the remaining $1.8 billion, MENA said.

It did not say with which firms the state was negotiating.

Financial disclosures by companies including BP, BG Group, Edison SpA and TransGlobe Energy show that Egypt owed them more than $5.2 billion at the end of 2012.

Prior to the 2011 uprising, the oil and gas sector was a major focus of foreign direct investment in Egypt.

"We have been on hold since the revolution, with minimal exploration," said Mona Mansour, chief economist at CI Capital. "An agreement is definitely a boost."

The government's ability to pay oil companies and contractors suffered as tourists and investors left, cutting tax revenue and eroding foreign exchange reserves.

Mursi's political demise, the latest twist in Egypt's turbulent transition, kindled the worst bout of internal conflict in its modern history. Security forces killed hundreds of his supporters in the weeks after his ouster, and lethal attacks on the security forces have become commonplace.

Some 200 soldiers and policemen have been killed.

Though it has been driven underground by a security crackdown, the Muslim Brotherhood continues to organise protests against a government it says stole power in a military coup against a democratically elected leader.

It rejects the army's roadmap as illegitimate.

The Nour Party, which came second to the Brotherhood in the parliamentary election two years ago, helped draft the new constitution, which enhances the autonomy of the already powerful military and strips out Islamist-inspired provisions.

"The constitution is considered a first step on the road to stability that all Egyptians aspire to, and to preventing sliding into a spiral of anarchy," party leader Younes Makhyoun said.

The referendum is to be followed by presidential and parliamentary elections next year, though a last minute amendment to the draft constitution completed earlier this week has thrown the sequencing of the elections into doubt.

The change allows the interim head of state to call a presidential election first. Lending weight to the arguments for reversing sequence, Deputy Prime Minister Ziad Bahaa El-Din has said he favours holding the presidential election first, saying it will take much longer to hold parliamentary polls.

Pressing an official crackdown on dissent, the Egyptian Football Association (EFA) suspended from international competition a player who expressed solidarity with Mursi supporters killed in the crackdown.

After scoring a goal in the final of the African Champions League last month, Ahmed Abdelzaher of Egypt's Al Ahli flashed a four-finger hand gesture seen as supportive of Mursi. The EFA ruled that he had mixed "politics with sport".-Reuters




Tags: Egypt |

More Energy, Oil & Gas Stories

calendarCalendar of Events

Ads

Buy high quality China wholesale Health & Beauty , Electronics, Sports & Outdoors , Computers, Video Games, Toys & Hobbies Cell Phones, Automobiles and other wholesale products directly from reliable Chinese wholesalers or Factories on DHgate.com