The Egyptian General Petroleum Corporation (EGPC) is looking into proposals that would convert debt owed to foreign oil companies operating in Egypt into bonds, a process dubbed by economists as "debt securitization," an official at the EGPC told Turkish news agency, Anadolu.
A meeting was recently held between EGPC officials and the Central Bank of Egypt to study the proposal. Delegates agreed to prepare an integrated project including early implementation steps, proposed interest rates and the terms of the bonds, as well as nominations for global financial institutions to run the initiative.
According to the EGPC, the debts owned by International oil companies reached around $5.4 billion by the end of June.
Foreign partners refuse to start new investments in the development of natural gas exploration, unless a binding schedule to pay back their debts is decided, Egyptian officials said.
The conversion of debt into bonds is a non-traditional solution for the petroleum sector, which is in the grip of a massive liquidity crisis following the January 2011 revolution.
The Egyptian government's lack of commitment to pay back debts owed to the EGPC has hurt an already crisis-racked oil sector in Egypt, with debts already reaching LE150 billion.
The Electricity Ministry owes around LE48 billion of that figure, while the Aviation Ministry and National Railway Authority owe LE12 billion and LE3 billion respectively.
Hani Dahi, former head of the EGPC, had denied in July 2012 that the corporation sold local or international bonds to manage liquidity needs, providing petroleum products for the domestic market.
Edited translation from Al-Masry Al-Youm
