The Egyptian General Petroleum Company (EGPC) hopes to offer a global tender to banks this month for a loan to pay part of the dues owed to foreign partners in the oil and gas sectors before year-end.
Minister of Petroleum and Mineral Resources Sherif Ismail did not specify the value of the loan which will be offered for a tender, but it will be over $1bn.
He stressed that the ministry aims to pay $2bn-3bn of dues to foreign partners by the end of the year in order to encourage them to expand investment in the Egyptian petroleum sector.
The petroleum ministry entered into an agreement with the National Bank of Egypt, which was awarded the opportunity to arrange mutual loan valuing EGP 10bn with a dollarized portion worth $550m. The loan will be paid over four years with a one-year grace period.
Approximately EGP 6.4bn will be paid over five years with a one-year grace period to Misr Petroleum and Co-op Petroleum, both owned by the EGPC. The alliance submitted the best offers in the bid, which was offered for national banks to arrange the loan.
The alliance of financing banks includes National Bank of Egypt, Commercial International Bank, Arab African International Bank, Banque Misr, and QNB ALAHLI. These banks will provide the value of the loan all at once, generating one of the largest loans arranged by local banks for Misr Petroleum and Co-op Petroleum.
The EGPC official pointed out that debts to foreign oil and gas companies measured $6.2bn at the end of August 2014.
He said that offers have been made by foreign, global banks to lend to Egypt’s petroleum sector and there is no value in their refusing to lend to Egypt. He explained that foreign and local banks will submit offers for the tender set to be offered this month out of their confidence in the Egyptian economy as well as the country’s ability to adhere to making payments.