* Payment of 1st tranche consistent with government timeline
* $1.2 bln to be paid in US dollars, rest in Egyptian pounds
* Repayment key to restoring investor confidence
CAIRO, Dec 23 Egypt will complete payment this
week of $1.5 billion of the $6.3 billion it says it owes oil
firms, a state executive said on Monday, in line with a plan
aimed at restoring confidence in an economy hit by nearly three
years of political turmoil.
"Today we are reimbursing $1 billion to the foreign partners
and the rest during this week," the chairman of state-run
Egyptian General Petroleum Corporation (EGPC), Tarek El Molla,
told Reuters by telephone.
Approval of the $1.5 billion payment was announced by the
government on Dec. 4. The government said the next day it would
repay a further $3 billion in monthly instalments until the end
of 2017, hoping this will encourage needed investment in the
Molla said $1.2 billion of the initial tranche is being paid
in U.S. dollars and the remaining $300 million in Egyptian
pounds, as officials had indicated.
He said the government was working on a plan for full
repayment of the $6.3 billion it says it owes.
Molla had previously told Reuters that "satisfying" foreign
partners was essential to the government's strategy of
encouraging foreign oil companies in the country to increase
exploration and production in exchange for a more rapid
repayment of the money it owes them.
Financial disclosures by firms including BP, BG Group
, Edison SpA, TransGlobe Energy, Eni
and Dana Gas show Egypt owed them more than
$5.2 billion at the end of 2012. Industry sources have indicated
the total sum owed is likely to be much higher.
Egypt has been delaying payments to firms because political
upheaval since the overthrow of President Hosni Mubarak in 2011
has battered its economy, frightening away tourists and
investors, and cutting into tax revenues.
Some of the debts were incurred before the 2011 revolt.
Authorities have repeatedly promised to repay arrears since
the army toppled then-President Mohamed Mursi on July 3 and
after oil-producing Gulf Arab states, which fiercely opposed his
Muslim Brotherhood, promised financial support to Egypt.
In the week after the army takeover, Saudi Arabia, Kuwait
and the United Arab Emirates pledged a combined $12 billion in
grants, interest-free loans, and oil products.