Egypt waives EGP 5.3 bn-worth of natgas arrears owed by factories

Struggling state-owned and private sector factories will not have to pay 5.3  billion Egyptian pounds in overdue bills for natural gas they bought from subsidiaries of the Oil Ministry on or before 31 December 2019.

The ministry of petroleum has submitted proposal to waive these arrears which as approved by the Madbouly Cabinet in its weekly meeting yesterday.

This will apply to late fees and penalties factories incurred for exceeding quantities specified in supply agreements with the government or failing to meet the minimum amount of natgas outlined in the agreements. The decision has not been linked directly to the covid-19 crisis and appears to be geared towards facilities that have been struggling or entirely stagnant for years.

Factories in Egypt currently pay on average USD 4.5/mmBtu of natural gas after the government slashed prices twice in the past six months, the statement notes. The first round of price cuts came last October after years of lobbying efforts by manufacturers who said high energy costs are affecting their product prices and thus sales which is causing them to work under their full production capacity.