Egypt Falters on Fuel Payments, Suppliers Say

Egypt has struggled to obtain bank payments for its fuel purchases, trade sources said, delaying diesel supplies for transport, industry and agriculture ahead of the second round of an election vote.

The payment problems have caused shipping delays and prompted some suppliers to think again before offering oil into a forthcoming $1 billion import tender, half a dozen trade sources, including current suppliers, told Reuters.

They said delays of up to two weeks in deliveries were a regular occurrence ahead of peak summer demand for diesel, blaming Egypt's difficulties in obtaining letters of credit from banks. An official at the Egyptian General Petroleum Corp (EGPC) denied this.

A trader involved in the transactions said banks were increasingly nervous with loans and required additional assurances as Egypt's stretched finances made it harder to pay for its heavy fuel subsidies bill. "There has been a queue of (oil) product vessels in Egypt that are waiting for letters of credit," said a second trader working for a Swiss-based trading house.

Fuel shortages have already caused anger this year and have delayed the harvest. Long lines at fuel stations in central Cairo were forming on Thursday, causing large traffic jams in some main thoroughfares.

Amr Moussa, a former foreign minister and a leading figure in Egyptian politics since last year's overthrow of autocratic leader Hosni Mubarak, criticised the army-backed government's handling of the fuel shortages. "People trust governments who do not leave them in the dark," Moussa said on Twitter. "This is not how matters should be managed." An official for EGPC who declined to be named denied that there were delays to shipping and access to financing. "This is not true at all. All the vessels have been arriving on time. There are no payment problems," he said.

EGPC is seeking to buy more than one million tonnes of gasoil, or diesel, from July to September worth around $1 billion via a tender that closed this week - almost as much as it sought in the preceding six months.

Reuters AIS Live shipping data this week showed that there are typically somewhere between 6-10 oil product tankers anchored off Egyptian oil ports, although it was not possible to verify which ones were affected by payment problems.

Some of these tankers are deliveries from EGPC's last gasoil tender, which closed in March. One supplier affected by the disruptions said its tankers were finally starting to unload on Thursday after being held up.