DUBAI - Cash-strapped Egypt will spend $18 billion over coming years to build new refineries and modify existing plants in a move to increase its annual fuel output, the country's oil minister said in an interview with Al Tahrir Television.
"There are some urgent measures to be taken this fiscal year to operate some refineries safely ... and there are measures in the next couple of years to lift the output of the existing refineries from the current 25-26 metric tons a year to more than 30 million tons," Osama Kamal told the Egyptian channel.
Overall "we have decided in November to invest $18 billion until 2017 to build new refineries and upgrade the existing refineries we have," he said.
Egypt has been paying hefty premiums for its crude deliveries for its refineries due to a weaker pound and difficulties in securing letters of credit for its transactions, while a shortage of state-subsided diesel has paralyzed transportation in many parts of the country.
Continuing unrest in the country since the ousting of former President Hosni Mubarak has led to a risky economic mix of dwindling foreign-exchange reserves, declining tourism revenue and costly price subsidies, economists said. To prop up the Egyptian currency, the central bank has gone through nearly two-thirds of its foreign-currency reserves, pushing the country to the brink of a liquidity crisis.
Egypt is trying to secure a $4.8 billion loan from the International Monetary Fund, a move viewed as critical to rescuing its economy and mending its reputation as a place to do business.
The IMF wants Egypt to reduce its subsidy spending, as part of a reform plan for the loan, say those close to the talks. But any subsidy changes would likely only enrage the legions of poor who rely on cheap fuel.
Copyright (c) 2012 Dow Jones & Company, Inc.
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