Banks to Arrange $1.5bn Loan for Egypt to Repay Foreign Energy Firms

HSBC, National Bank of Egypt, and National Bank of Abu Dhabi will arrange a $1.5 billion syndicated loan to Egypt’s state oil company in order for the country to pay back foreign energy companies, a statement from the banks said on Friday.

Egypt hopes the move will encourage energy firms to boost exploration to help ease the country’s worst energy crisis in decades, with consumption rising as production is dropping.

“Disbursement of the loan will start before the end of December 2014, with each bank having a share of $500 million,” Hisham Okasha, chief executive of National Bank of Egypt, told Reuters by telephone.

Egypt said earlier this month that it planned to issue a tender to finance $2 billion of repayments by the end of the year and that it plans to repay all of its $4.9 billion debt to foreign oil and gas companies within six months.

Egypt has delayed payments to oil and gas firms as its economy has been hammered by almost three years of instability since a popular uprising ousted autocrat Hosni Mubarak.

Arrears began to accumulate before the revolt, but worsening state finances saw the debts mount to billions of dollars while the government diverted gas earmarked for export to meet domestic demand.

Source: Reuters