Gov’t fully clears USD 6.1 bn in arrears to int’l oil companies

Good morning, wonderful people. We head to the weekend with a mixed bag of inflation data, as annual urban inflation urban inflation cooled to 14.6% in May, but monthly figures ticked up to 1.6% due to lingering food price pressures. Because of these persistent upside risks, don’t expect any rate cuts just yet — analysts agree the central bank will likely maintain its cautious wait-and-see approach and keep rates on hold at its meeting next month.

We take a deep dive into the rationale behind Madbouly’s no-new-IMF-program stance after the current facility expires next December. However, some experts warn that unforeseen global shocks could eventually force a return to the Fund.

… and finally, the government cleared its massive USD 6.1 bn backlog of arrears owed to international oil companies. Now we will be tracking if the zero-arrears label remains.

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A bill worth paying

The government fully cleared its outstanding arrears to international oil companies — totaling USD 6.1 bn accrued since June 2024, according to a statement (watch, runtime: 05:57) from Oil Minister Karim Badawi. The payment fulfills the promise the government made to the energy sector as it tries to reverse years of declining domestic production.

Why it matters: Clearing the arrears backlog was the linchpin in the government’s strategy to restore investor confidence and get international operators drilling again. Combined with sweeter commercial terms, settling the debts has already unlocked a USD 19 bn investment pledge from global energy majors, which sets the state up to hit its USD 6.2 bn sector FDI target next fiscal year.

But don't expect an immediate fix: Even with capital flowing back in, offshore drilling and infrastructure development take years, meaning a significant rebound in domestic output won’t happen overnight.

It wasn’t easy, but it’s done: Despite ongoing regional disruptions, the government remained dedicated to paying down its debt over the past three months. Arrears stood at USD 714 mn at the end of April and were slashed to USD 440 mn by the end of May. This commitment comes even as the country faces rising energy prices and a surging gas import bill — which stood at USD 2.5 bn in 1Q and is set to jump to USD 10.7 bn in the next fiscal year.

Gabal El Zeit gets its PPA terms

Alcazar Energy’s Gabal El Ziet wind farm transaction will run for 25 years at a tariff of USD 0.03 per kwh under its power purchasing agreement (PPA), a senior government official tells EnterpriserAM. The Egyptian Electricity Transmission Company will off-take all generated power, with the bulk of the tariff to be settled in USD and the remainder in EGP over the life of the project.

The upgrade: The terms are tied to a recently inked USD 420 mn agreement with the New and Renewable Energy Authority to operate and manage the 580 MW facility. To achieve this, the UAE-based company will gradually funnel USD 250 mn into operational investments to restart idle turbines, lift efficiency, and maintain a minimum output of 580 MW.

Why it matters: The agreement gives one of the country’s largest wind assets a private-sector upgrade at a time when the government is racing to reach its renewable energy targets and reduce its reliance on natural gas. The farm generates up to 2.4 TWh of clean electricity and avoids over 1.1 mn tons of CO2 emissions annually, the official adds. It also provides a welcome addition to the privatization pipeline, which took a hit earlier this week after the long-awaited Banque du Caire IPO was delayed to September.

Going green for EBRD capital

The European Bank for Reconstruction and Development (EBRD) is targeting EUR 7.5 bn (c. EGP 450 bn) in financing for Egypt over the next five years, the Arabic press reports, citing Mai Ismail, the lender’s associate director. The EBRD is planning to direct a larger share of this capital toward real estate, but developers need to adopt green construction models to receive it.

The EBRD is on a major green push, mandating that at least 50% of its annual investments go toward the Green Economy Transition, according to its 2026/28 strategy implementation plan (pdf). For developers, this means certifications likeEDGE and LEED can transform a property into a highly bankable asset, opening the door to a completely different investor base and unlocking much better financing terms, including lower interest rates and extended grace periods.

REFRESHER- The EUR 7.5 bn target underscores the EBRD’s expansion beyond traditional infrastructure into green logistics and MSMEs in Egypt. Recent moves include a EGP 1.3 bn green facility for an EDGE-certified Ibnsina Pharma warehouse and a USD 50 mn package to NBK Egypt, targeting youth-led and underserved MSMEs.

Another IPO delayed to 4Q

Qalaa Holding’s logistics arm National Ports Management (NPM) is now looking to IPO in September, the Arabic press reports, citing Chairman Ahmed Heikal. The move pushes back an original June-July window for the float.

The bigger picture: Qalaa is planning to float three additional subsidiaries within one year of NPM's debut (compared to five subsidiaries it said it was mulling late last year), including Dina Farms for Food Industries, ASEC Automation, and one unnamed company — part of a masterplan by its corporate parent to shrink its debt pile.

Dodging the summer market lull? Earlier this week, Banque du Caire — one of the government’s headline IPO acts — also pushed its roadshow back to a September-October window, with bookrunners EFG Hermes and CI Capital citing the need to widen the institutional book after the summer slowdown. Regional geopolitical tensions reportedly also played a part in the decision.

ADVISORS- Zilla Capital is quarterbacking the IPO, with Baker Tilly serving as the independent financial advisor.

Happening today

Introducing KORA.CA. Shares of Korra Energi will hit the EGX trading floor in just a few hours at an opening price of EGP 2.97 per share, according to a bourse filing (pdf). The stock can swing as much as 40% in either direction — double the usual limit — with circuit breakers temporarily switched off until the market settles on a closing price today, giving plenty of room to find its footing. The company is floating some 247.5 mn shares, good for an 11% stake.

REFRESHER-Korra Energi wrapped up bookbuilding for its EGP 735 mn IPO before the Eid Al Adha holiday. Retail demand for the offering far exceeded institutional appetite, with the 99 mn-share public offering closing at a massive 31.35x oversubscription. The private tranche was 3x covered.

Why it matters: This is the second IPO this year, after Gourmet’s blockbuster offering in February, and the first to hit the market since the Iran war broke out and rattled regional sentiment — making it an early read on investor appetite in a more uncertain environment. While the EGX has remained relatively insulated — posting modest gains compared to its GCC peers — foreign and regional investors have largely pulled back.

PSA-

WEATHER- The familiar warm weather is lingering in Cairo today, with a high of 35°C and a low of 23°C, according to our favorite weather app.

It’s several degrees cooler in Alexandria, with a high of 29°C and a low of 21°C.

And over the weekend, expect to see similar temperatures in the capital (a high of 34-35°C) and the same cooler conditions for our friends on the Mediterranean (a high of 28-29°C).

The big story abroad

The US launched a fresh wave of attacks on Iran last night and threatened to continue the attacks if Tehran doesn’t sign the peace agreement. US President Donald Trump said Iran would “pay the price” for dragging out negotiations.

The Iranian response: Iran launched strikes in Bahrain targeting the US Fifth Fleet — Bahrain’s Interior Ministry sounded the alarm and told the public to seek shelter. Shortly after, Kuwait said it was intercepting aerial targets.

The state of Hormuz is unclear, with contradicting reports from Iran and the US. State-run Iranian media said the waterway has been closed to all vessels, while the US said commercial ships are continuing to transit.

Looking at the markets: Oil jumped on the news, with Brent crude rising over 2% to USD 95.14. Asian markets opened lower — extending losses initially triggered by a tech selloff — and in the US, equities are on track to open in the red with futures down in response to the attacks.

Speaking of US markets: The country saw inflation pick up in May, recording 4.2% — its highest level in three years — on the back of rising energy costs, making a rate hike from the Federal Reserve appear increasingly likely. Commenting on the figure, Trump said, “I love the inflation,” promising that “oil [will] drop to where it was before [the war].”

The 2026 World Cup kicks off tonight with a showdown between South Africa and Mexico starting at 10pm. To better acquaint yourself with the players, check out The Athletic’s list of 200 players to watch at the 2026 World Cup. The Pharaohs will face Belgium on Monday at 10pm and then New Zealand a week later.