{"id":24319,"date":"2026-10-26T09:00:44","date_gmt":"2026-10-26T07:00:44","guid":{"rendered":"https:\/\/zawia3.com\/?p=24319"},"modified":"2026-10-25T12:46:57","modified_gmt":"2026-10-25T10:46:57","slug":"oil-debt","status":"publish","type":"post","link":"https:\/\/zawia3.com\/en\/oil-debt\/","title":{"rendered":"After \u201cZero Arrears\u201d: Petroleum Debt Exceeds EGP 1.6 Trillion. Has the Crisis Ended or Merely Changed Its Name?"},"content":{"rendered":"

The Egyptian General Petroleum Corporation (EGPC) accounts for the largest share of government sovereign guarantees, and its debts and short-term liabilities constitute one of the most significant fiscal risks to the state budget. It alone receives<\/a> around 58\u201360% of all guarantees issued by the Ministry of Finance, with a value that reached<\/a> approximately EGP 3.1 trillion as of September 2025, which the International Monetary Fund estimated<\/a> at around 18% of gross domestic product.<\/p>\n

By the end of June 2026, the total debt of Egypt\u2019s petroleum sector had reached EGP 1.6 trillion, according to an announcement<\/a> by Petroleum and Mineral Resources Minister Karim Badawi in response to a question from President Abdel Fattah al-Sisi during the \u201cEgyptian Energy Journey: National Achievements and Future Prospects\u201d session at the Egypt Forum 2026, held on 22 October.<\/p>\n

Shortly before the IMF mission in November 2025, the Ministry of Finance paid<\/a> EGPC EGP 451.8 billion. This included EGP 166 billion in overdue subsidy compensation, EGP 13.6 billion in obligations owed by the electricity and water ministries, and more than EGP 98 billion paid<\/a> against guarantees of the corporation\u2019s debts, in preparation for the IMF review and the completion of disbursements under the USD 8 billion loan.<\/p>\n

As a result, by June 2026 the corporation was able to settle<\/a> all arrears owed to foreign energy companies, after they had peaked at around USD 6.1 billion on 30 June 2024, according to statements<\/a> by Petroleum Minister Karim Badawi. This prompted the companies to inject new investments into exploration and production.<\/p>\n

In March 2026, the minister had announced<\/a> investment pledges exceeding USD 19 billion over the following three years, which the government reaffirmed<\/a> when it announced full settlement in June. They included USD 8 billion from Italy\u2019s Eni, USD 5 billion from Britain\u2019s BP, USD 4 billion from the US company Apache, and USD 2 billion from Arcius Energy, the joint<\/a> venture owned 51% by BP and 49% by XRG, the investment arm of the UAE\u2019s ADNOC Group.<\/p>\n

The outstanding payments<\/a> owed to foreign partners are commercial obligations of EGPC arising from purchases of the partner\u2019s share in dollars. They are not sovereign loans, nor are they counted within external debt, which exceeded<\/a> USD 166 billion by the end of June 2026. However, the IMF considers them one of the largest fiscal risks<\/a> because they are guaranteed by the state.<\/p>\n

In its recent reviews, the Fund warned of the fiscal burden these guarantees place on the state budget, calling<\/a>, as part of the corporation\u2019s sustainability plan, for a 25% reduction during the 2026\/2027 fiscal year through increased production, energy-price adjustments and stronger collection mechanisms.<\/p>\n

Egypt\u2019s total stock<\/a> of sovereign guarantees stood at around 32% of GDP at the end of June 2025. Estimates<\/a> suggest that total state-guaranteed loans could reach around EGP 6.2 trillion during the current fiscal year, with EGPC accounting for approximately 60%. Government guarantees are expected<\/a> to rise to EGP 6.9 trillion in the next fiscal year, equivalent to around 28.1% of GDP. This ratio is declining despite the increase in the guarantees\u2019 nominal value, as nominal GDP grows alongside inflation.<\/p>\n

The corporation faces an operating deficit and a financing gap because it buys petroleum products or its partners\u2019 shares in US dollars at international prices, while selling them locally in Egyptian pounds at subsidised or lower prices. It also suffers from delayed payments by government entities, particularly the electricity<\/a> sector. It therefore resorts to credit facilities and short- and medium-term loans to meet operating requirements, pay foreign partners and purchase fuel.<\/p>\n

The report on the seventh review<\/a> of the Extended Fund Facility programme, issued on 13 August 2026, states that the settlement of EGPC\u2019s arrears to foreign oil and gas companies was supported<\/a> by external loans obtained by the corporation from international institutions with government guarantees, alongside direct budgetary transfers<\/a>. However, neither the Egyptian government nor the Fund published details of the lenders\u2019 names, interest rates or repayment periods.<\/p>\n

In March 2025, the Cabinet had approved a package of reforms<\/a> for EGPC, including an allocation of EGP 75 billion from the budget to settle arrears, and an equal amount for the Egyptian Electricity Holding Company.<\/p>\n

In May 2026, the corporation obtained USD 800 million in financing<\/a> under the 2026 annual work programme between the Egyptian government and the International Islamic Trade Finance Corporation, a member of the Islamic Development Bank Group, with a total value of USD 1.5 billion.<\/p>\n

Last September, Misr Petroleum and El-Taawun Petroleum obtained<\/a> two loans totalling EGP 24 billion: EGP 14 billion from Suez Canal Bank for the former and EGP 10 billion from Qatar National Bank for the latter. Guaranteed by the Ministry of Finance for a three-year term, the loans cover letters of credit for petroleum-product imports on behalf of EGPC, according to informed sources cited by Al-Shorouk.<\/p>\n

EGPC is seeking to borrow<\/a> around USD 850 million from a consortium comprising Abu Dhabi Commercial Bank, Mashreq and Standard Chartered, for the account of \u201cBel\u201d, a company the corporation established specifically to obtain this financing. The three-year loan would be secured by EGPC\u2019s export contracts and shipments, according to press reports.<\/p>\n

<\/svg><\/div>\n

How Did the Corporation\u2019s Debts Accumulate?<\/h2>\n

Arrears<\/a> owed to foreign petroleum companies began to emerge in 2004 and 2005, reaching around USD 610 million, as consumption of diesel, fuel oil, cooking gas and petrol exceeded domestic production. This prompted the ministry to purchase foreign partners\u2019 shares and import the remaining quantities to meet market needs.<\/p>\n

The crisis worsened after 2011, with arrears rising<\/a> to around USD 6.3 billion, driven by higher global oil prices and the allocation of financial resources to fuel imports. This affected the availability of supplies: fuel stocks covered no more than two days, while foreign companies refrained from making new investments, and not a single petroleum agreement was signed between 2011 and November 2013.<\/p>\n

At the end of 2013, overdue payments to foreign partners stood<\/a> at USD 6.3 billion. Following successive payments, they fell to around USD 3.5 billion in mid-2015, and to USD 2.9 billion by the end of August that year after around USD 600 million was paid<\/a> in a single month. They then declined<\/a> to USD 2.7 billion by the end of October 2015.<\/p>\n

The outstanding payments rose again to USD 3.4 billion by the end of June 2016, despite Egypt paying<\/a> USD 100 million during the 2015\/2016 fiscal year, before falling<\/a> to around USD 2.3 billion by the end of June 2017, USD 1.2 billion in 2018, and approximately USD 900 million<\/a> by the end of June 2019.<\/p>\n

However, the coronavirus pandemic, followed by the Russia\u2013Ukraine war, the outflow of foreign portfolio investments and declining foreign-exchange reserves, caused outstanding payments to accumulate<\/a> again. They reached USD 6.1 billion on 30 June 2024, according to the Ministry of Petroleum, and USD 6.2 billion<\/a> in October of the same year, according to the IMF.<\/p>\n

With the announcement of the USD 35 billion Ras El-Hekma deal<\/a> with the UAE in February 2024, the government began accelerating repayments, subsequently supported by allocations under the March 2025 reform package.<\/p>\n

By December 2025, arrears had fallen to around USD 2 billion<\/a>, according to the IMF. In January 2026, Prime Minister Mostafa Madbouly announced<\/a> that the government had paid around USD 5 billion, aiming to reduce the remaining balance to USD 1.2 billion by June of the same year while committing to regular payment of monthly invoices. By March 2026, the balance<\/a> had fallen to around USD 1.3 billion, according to the ministry.<\/p>\n

The pace of repayment accelerated in recent months: the outstanding balance fell<\/a> to USD 714 million in April<\/a>, then to USD 440 million in May, before the announcement of the final payment on 10 June 2026, about three weeks ahead of the target date.<\/p>\n