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Friday, September 27, 2013
Dana Gas reported that it expects to see some $210 million from the Egyptian government for gas supplied to the domestic market from its operations in the country. The company has supplied an estimated $290 million in natural gas to Egypt, but has only been paid for a small amount of it.
The government in Egypt has been having a hard time meeting its commitments to its oil and gas producers ever since the 2011 popular uprising against Hosni Mubarak and the latest uprising over democratically elected Mohamed Morsi has just added to the country’s financial woes.
“Egypt is going through a rough period right now, but it will come good,” Dana Gas CEO Patrick Allman-Ward said at a press briefing at the company’s headquarters. “It’s coming in, but it is not coming in quickly enough.”
There are also reports that Dana will begin to accept payments in local currency in order to make it easier for Egypt to find the money needed by the producer to sustain output. The company is currently waiting for a reply to its proposal that the country pay 65% of the dollar debt in Egyptian pounds. The temporary measure would let Egypt retain foreign-exchange reserves and give Dana currency to pay local costs.
While the proposal would give Dana a much needed influx of cash, issues could include fluctuating EGP, inflation, and instability hampering its monetary unit. Another negative for Dana would be that the government will decide what exchange rate to give on the dollar, which will always be in their favor rather than what the real exchange rate is. On the other hand, perhaps for Dana, some money is better than no money.
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