Egypt Pens Energy Debt Payoff Deal

Source: Reuters 12/5/2013, Location: Africa

Egypt's army-installed government unveiled a timetable to pay $3 billion of $6.3 billion it owes to foreign oil firms, part of a campaign to revive confidence in an economy hammered by three years of political turmoil.

Five months after President Mohamed Mursi's downfall and following a fierce crackdown on his Muslim Brotherhood, the government is trying to restore a semblance of normalcy by moving ahead with a political roadmap and boosting the economy.

But criticism of the army-backed authorities has spread recently to include secular activists angered at government moves seen as a threat to political freedoms won by the 2011 uprising against president Hosni Mubarak.

On Thursday, prosecutors ordered three dissidents to stand trial over protests ignited by a law that severely restricts the right to demonstrate. They include Ahmed Maher, one of the symbols of the 2011 uprising, who faces charges including protesting without official permission.

Saying the country needed to be spared more instability, the hardline Islamist Nour Party urged Egyptians to approve a new constitution in a referendum that is an important milestone in the political roadmap. Nour backed Mursi's ouster.

The government has pointed to the approaching referendum as proof of political progress it hopes will propel the economy of Egypt, whose instability worries the West because of its peace treaty with Israel, proximity to Europe and control of the Suez Canal, the shortest sea trade route between Asia and Europe.

Cairo aims to revive investment in the crucial energy sector by paying off debts to foreign firms that extract its oil and gas. Egypt's finances have been buoyed by $12 billion in financial aid from Saudi Arabia, Kuwait and the United Arab Emirates - states deeply hostile to the Muslim Brotherhood.

Under a timetable announced on Thursday, the government will pay off $3 billion of the debt to foreign firms in monthly instalments until December 2017, the state news agency said.

Arrears of $1.5 billion will be paid straight away, it said, following the government's announcement of final approval of that sum. The government is in talks to agree a timetable to repay the remaining $1.8 billion, MENA said.

It did not say with which firms the state was negotiating.

Financial disclosures by companies including BP, BG Group, Edison SpA and TransGlobe Energy show that Egypt owed them more than $5.2 billion at the end of 2012.

Prior to the 2011 uprising, the oil and gas sector was a major focus of foreign direct investment in Egypt.

"We have been on hold since the revolution, with minimal exploration," said Mona Mansour, chief economist at CI Capital. "An agreement is definitely a boost."

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