Petroleum Ministry Owes LE 100 Bln To Finance Ministry
The Petroleum Ministry’s crisis regarding its obligation to pay dues of foreign partners was aggravated recently, due to the petroleum sector paying support expenses from its own revenues. This has led partners to continue reducing their production rate of gas and oil.
A General Authority for Petroleum senior official revealed in a statement to Daily News Egypt, that petroleum dues to the Finance Ministry amount to over EGP 100bn. This was due to the authority paying the support of petroleum products annually.
He said that the petroleum agreements state there will be an interest rate on dues of the government’s foreign partners in the case of late payments, and the rate varies in each agreement.
The official also said that the agreements include an interest added on dues. They will obligate partners to inject the required investments in order to carry out development and exploration processes in various fields.
Partners have reduced their investments, which violates the agreement, resulting in a decrease in the production rate of gas and oil. This is due to the lack of financial liquidity, as the government did not pay full dues, the official added.
The official estimated the investments of foreign partners during fiscal year (FY) 2015/2016 at $6bn, compared to nearly $7.5bn during FY 2014/2015.
He explained that foreign partners in the petroleum sector are dealing with the government’s lack of commitment to promises of paying part of the dues on time. The foreign partners have responded by delaying the connection of timely natural gas production, with the company’s plan which was agreed upon with the petroleum ministry.
The official added that the amount of $1.5bn paid recently by the Ministry of Petroleum to foreign partners were to be paid last June according to the government’s agreement with the companies. The difficulty of providing the amount of money needed for this to happen has prevented the repayments.
Egypt’s total production of gas reached 4.47bn cubic feet per day, and an amount of 690,000 of barrels of oil daily.
Source: Daily News Egypt
