Under the weight of debt and the scarcity of the dollar, and with the advent of loan installments amounting to $6 billion, early next July, Prime Minister Mostafa Madbouly announced the government’s desire to expedite the sale of 3 power stations, one of them in Beni Suef, with a loan of $8.2 billion, to be repaid in Early 2024, including execution value, operating and management contracts, and debt service benefits for 15 years.
In his statement, last week, the Prime Minister set 10 days to start offering electricity companies for sale to investors on the stock exchange and to negotiate with strategic investors, to transfer the assets of their ownership to the Sovereign Fund of Egypt. The latest promise came, the fifth of its kind since 2019.
Madbouly is trying to persuade the regime’s Gulf allies to pump money to help it face the economic crisis and reduce pressure on a currency facing a fourth devaluation in two years.
Promises to sell failed under the pressures of the spread of the Corona epidemic, and the war crisis in Ukraine, which brought out hot money at a tremendous speed, and led to deep financial shocks, prompting the government to search for an urgent way out to transfer the huge sovereign debt burden, the consequences of which will appear on the public budget in early January.
The sources confirmed the difficulty of executing these procedures quickly as requested by the Prime Minister, in a way that decides to postpone them for several months, and until an agreement is reached on the settlement of dues and loans related to these projects between the Ministries of Finance, Planning and Electricity and the creditors.
Details were absent, and the government failed to determine the offering stations and allocation ratios, and to determine the offering priorities for a major investor or for a public offering, and the timetable.
The government sought to present the stations to Gulf sovereign investment funds, investors from Europe and Asia, and strategic investors, over the course of a whole year, but it did not reach a specific result over the past years. The Executive Director of the Sovereign Fund of Egypt, Ayman Suleiman, announced that the Saudi Investment Fund is among those interested in the three stations, as part of Riyadh’s pledge to invest $10 billion in Egypt this year.
Borrowing represents the main source of financing the total deficit in the state’s general budget, and the payment of loan installments due during the next fiscal year.
The expected deficit in the fiscal year 2023-2024 amounts to about 824 billion pounds, while the value of repayment of domestic and foreign loan installments amounts to 1 trillion and 315 billion pounds, of which the debts of electricity companies represent 15%.
