Emirati company Dana Gas said in a Sunday statement that it received $60m in late dues from the Egyptian government. The sum makes up only a part of the full amount of $212m Egypt still owes to Dana Gas.
Egyptian payments to oil and gas companies have been delayed due to the country’s faltering economy after nearly four years of turmoil since the outbreak of the 25 January Revolution.
However, the Egyptian government said in November 2014 that it intends to pay energy companies dues within six months.
Minister of Petroleum, Sherif Ismail, said at the end of December 2014, that Egypt has paid a new batch of dues, worth approximately $2.1bn, owed to foreign companies’ dues. Ismail said that the step will improve the investment climate in Egypt and ease the country’s continuously worsening energy crisis for the first time in decades.
Ismail did not specify the amounts obtained by each company at that time. Among foreign companies to which the Egyptian government owes money are BP, BG, DANA Gas and Italian Eni.
Ismail said in a statement that this is the third tranche to be paid by Egypt to energy companies during 2014, although the government still owes $3.1bn in total.
Mohamed Farid, Chairman and CEO at Dcode Economic and Financial Consulting (Dcode EFC), said the current government is making tangible efforts to overcome the energy shortage crisis. This has come about due to the declining production rate of foreign companies because of the delayed repayments. However, Farid said that the schedule of debts to the foreign oil companies enhances their confidence and prompts them to increase their production.
Arrears began to accumulate before the 25 January Revolution, but the financial deterioration caused the debt to rise to billions of dollars when the government transferred the allocated gas for export to meet domestic consumption.
The rising debt impeded investment in the energy sector, despite recent government steps to address the issue began to boost the confidence of energy companies in Egypt.