The Central Bank of Egypt (CBE) opened a commercial letter of credit of $400m for the Egyptian General Petroleum Corporation (EGPC), to be paid within three months starting from January.
The sum will cover the cost of Egypt’s requirements of petroleum products and liquefied gas shipments required during that period.
A governmental official told Daily News Egypt that the CBE cannot afford more than $400m during that period, so as to avoid affecting the foreign currency reserves negatively. He added that EGPC collects its dollar requirements through its own resources.
The CBE announced that the volume of foreign currency reserves increased to $16.445bn by the end of 2015, compared to $16.422bn in November last year, marking an increase of about $23m.
The official added that EGPC agreed with the Saudi Arabian Oil Company, known as Saudi Aramco, to supply Egypt with products for three months starting from February with payment facilities and an interest rate of 1% to ease Egypt’s current dollar deficiency.
The CBE has allocated $400m for EGPC to purchase shipments of petroleum products, including gasoline, fuel oil, diesel, butane and liquefied gas; the sum will not be used to repay part of the benefits of foreign partners.
The official said that EGPC needs about $700m a month to provide the market with its requirements for petroleum products and natural gas.
The monthly requirements for the local market are estimated at 500,000 tonnes of diesel, 300,000 tonnes of butane, 150,000 tons of gasoline, as well as 500,000 tonnes of fuel oil and other shipments of liquefied natural gas, according to EGPC.
CBE Governor Tarek Amer said in a press conference last week that there is an obligation to provide foreign currency for the oil sector.
President Abdel Fattah Al-Sisi will hold a meeting with King Salman of Saudi Arabia this month to agree on the details of supplying Egypt with petroleum products for the next five years.
The official added that this agreement will be in the form of a commercial contract, to be renewed every three months between the two countries, with payment facilities and a low interest rate, which will be set at the time.