The National Bank of Egypt (NBE) has agreed to grant the Egyptian General Petroleum Corporation (EGPC) letters of credit (L/Cs) to the value of US$1 billion.

The L/Cs would allow EGPC to import crude oil and alleviate Egypt's chronic fuel shortages, which have anyhow been exacerbated by a severe lack of L/Cs (DC World News, 14 May 2013).

Ministry guarantee

The NBE expects to provide L/Cs to EGPC on a monthly basis at a value of between US$70-90 million for purchases of crude oil from Libya.

The bank has approved granting EGPC the L/C facility on the condition that the ministry of finance guarantees the credit.

Lending concerns

The NBE has said that the ministry of finance guarantee was not requested due to EGPC's rising debts.

Egypt's oldest commercial bank also says it has no concerns over the state petroleum company's ability to meet its credit obligations.

Debts

The guarantee to the loan's value was requested because the amount demanded exceeds NBE's maximum limits for any individual client, according to the bank.

Companies owed money by EGPC include Italy's ENI - which is owed US$1 billion - as well as British Petroleum and British Gas Group.

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