LONDON - Egypt owes at least $5 billion to oil companies, half of it overdue, corporate reports have revealed, in a development highlighting the country's struggle to meet soaring energy bills while subsidizing prices to avoid public unrest.
Egypt has been delaying payments to firms producing oil and gas on its territory as it has struggled with dwindling currency reserves, rising food bills and sliding tourism revenues since the 2011 revolution that overthrew Hosni Mubarak.Most oil firms hope to recoup the debts in full, but they acknowledge it could take years. While they are still planning to invest in new projects in Egypt that will help it avoid an energy meltdown, the debt situation remains a challenge.
The government's delay in paying its debts to oil and gas producers could hold back investment in the sector and potentially endanger Egypt's energy security.
"The delays in payments to the operators end up hurting Egypt itself as a potential decline in investment and production may lead to lower government revenues and a supply gap, in a potential vicious circle," said Maji Jafar, managing director of the board of Dana Gas.