EGPC Grants Local Banks Extension Till Mid-Feb To Present Funding Offers

The Egyptian General Petroleum Corporation (EGPC) has not received any offers from the National Bank of Egypt (NBE), Banque Misr, Commercial International Bank (CIB) and Banque Du Caire to finance the importing of petroleum raw materials, after the U.S. banks JP Morgan and Morgan Stanley delayed a loan worth US$ 2 billion for EGPC as they conditioned the loan on signing the US$ 4.8 billion loan agreement between Egypt and the International Monetary Fund (IMF).

EGPC has set the middle of February as a final deadline for banks to submit their financing offers which the company needs repay dues of foreign partners and import the required raw materials. The banks have delayed their offers several times because of the dollar liquidity shortage and the hike of the pound’s depreciation against foreign currencies. Therefore, EGPC has given banks an extension till the middle of this month to present their offers.

EGPC asked NBE, Banque Misr, CIB and Banque Du Caire to offer financing offers separately with value ranging from US$ 750 million to US$ 1 billion to dispense with the foreign loan.

CBE showed in its recent report that EGPC received US$ 9.325 billion; US$ 2.879 billion in 2011 and US$ 6.445 billion in 2012. The largest value it received from CBE during the two years was US$ 1.882 billion in Q4 of 2012.

It is worth noting that local banks’ loans to EGPC are facing many challenges such as the maximum lending limit for each customer which shall not exceed 20% of the bank’s capital base. The value of loans secured by EGPC reached EGP 80 billion. EGPC’s ability to secure loans is also affected negatively by the unstable political and economic conditions in the country, lowering of Egypt’s credit rating and pound’s depreciation against foreign currencies.