BREAKING NEWS

Egypt struggles to buy fuel as credit dries up

By REUTERS

AUGUST 23, 2012 15:28

LONDON/CAIRO - Egypt is finding it increasingly difficult to import fuel as foreign banks and traders pull the plug on credit and charge high premiums due to concerns over its financial and political stability, trading and banking sources said.

Sporadic international loans have so far helped, and the country requested up to $4.8 billion from the International Monetary Fund (IMF) on Wednesday, but without such ad-hoc interventions, Egypt could quickly end up like debt-stricken Greece, dependent on a narrow pool of traders charging richly for supplies.

That could put a dangerous strain on Egypt's finances, which are already under pressure from high fuel subsidies it can ill afford to maintain but dare not cut in the precarious first months of new Islamist President Mohamed Mursi's tenure.

Since the election of Mursi in June this year following the overthrow of Hosni Mubarak in 2011, the number of suppliers has shrunk as oil traders are struggling to secure letters of credit from banks.

In the strongest evidence to date of rising fuel import difficulties, traders said Egypt had to cancel a tender to buy crude earlier this month after receiving no bids, and also had to scrap parts of a gasoline import tender because the prices on offer were too high.

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