• By
  • Summer Said


Associated Press
Egyptian drivers wait outside in long queues at a gasoline station in Cairo.



“It is way too optimistic that Egypt thinks that a move to restructure the debt or make initial payments could put an end to their troubles and make foreign partners pour money back into the country,” said an oil industry analyst, who asked not to be named. “You are talking about three years of political instability and a steep decline in the economy that scared off everyone…any payments that will be made will come from the Gulf aid they got earlier and not is not proof of stability.”

Egypt’s effort to slash its energy debt came after Saudi Arabia, Kuwait and the United Arab Emirates promised a total of $12 billion in loans, grants and fuel shipments to help its ailing economy. The aid flowed after a military intervention in July ousted Mr. Mubarak’s successor, Mohammed Morsi. The pledges have so far allowed Egypt to stabilize food and fuel prices, bolster its dwindling foreign reserves and hold off negotiating an International Monetary Fund loan for $4.8 billion.

An Egyptian oil official close to the restructuring talks said the government has agreed to use some of the Gulf aid money to make initial payments to oil companies, but it has yet to find other sustainable revenue streams to make further payments over the next couple of years.

“It is a complicated process and $6 billion is a major amount to be paid fully in a timely manner unless Gulf countries give Egypt more financial support,” the official said.

Some analysts say initial payments made to oil producers will provide only temporarily relief to an energy sector that has been in a deep hole since the start of the Arab Spring.  The repayments, they argue, are an attempt to stop many oil firms from exiting the market completely.

“This is giving the oil companies just enough to stop them from screaming. Egypt has other spending priorities elsewhere, particularly on giving people food and fuel rather than paying oil companies,” said Robin Mills, head of consulting at Manaar Energy in Dubai. “Theoretically they want oil companies investing in the country but this is rather a longer term pay off. When you are in a survival mode that seems to be less of priority.”