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Thursday, 24 May 2018

Cabinet mounts push for state-owned companies start paying overdue energy bills; will channel funds to energy companies

EXCLUSIVE- Cabinet is pushing state-owned companies start paying overdue energy bills; will channel funds to energy companies: The Ismail Cabinet is pushing state companies falling under the umbrella of the Public Enterprise Ministry start paying overdue gas and electricity bills so that the government can accelerate payments to foreign energy companies and other contractors, sources close to Cabinet tell us. In addition to payments owed by the Oil Ministry to international oil companies, Siemens and GE still have receivables on their books owed by the Electricity Ministry, sources said, adding that the arrears were a subject of discussion at this week’s cabinet meeting. CBE Governor Tarek Amer had said earlier this month that Egypt plans to pay IOCs USD 850 mn without noting the timeline for the disbursement.

Oil Ministry sources had previously said that Egypt will pay IOCs USD 200 mn in June. The Oil Ministry’s arrears had dropped to USD 2.4 bn as of June 2017, but the ministry has been preferentially making payments to the global oil majors while starving local producers, industry sources tell us.

In related news, CIB, Banque Misr, NBE, and Banque Du Caire are reportedly arranging a USD 550 mn syndicated loan to the Oil Ministry to help it pay down its arrears. Banque Misr Vice Chairman Akef El Maghraby said his bank has successfully placed USD 100 mn of the facility with eight local banks.

The government is going so far as to have four state holding companies starved for liquidity sell off assets to the private sector. Among them is the Cotton & Textile Industries Holding Company, whose CEO Ahmed Moustafa tells us that they are holding meetings with Public Enterprise Minister Khaled Badawi to determine which assets of its 22 companies to sell and how to proceed. He added that the company owes a total of EGP 2 bn in overdue bills. It plans to make an initial payment of EGP 350 mn and will sell assets worth EGP 1.7 bn to pay off the remainder.

Gov’t sorts out overdue bills: The Ismail Cabinet had set on Tuesday a timetable for when these companies need to start paying their overdue bills. State companies must make a 25% upfront payment of the bills, with the remaining 75% to be paid in 36 months. State companies must commit to paying their monthly bills on time, according to a cabinet statement.

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