A source from the Egyptian Natural Gas Holding Company (EGAS) stated that many brick factories are delinquent in payments for gas supplies and that EGAS will resort to legal action, unless the proposed rescheduling of debt re-payment is agreed upon by brickworks, reported Al Borsa News.
The majority of plants of the Arab Abo Saad project, refused to reschedule their debt payments under the EGAS terms, which stipulate that the delinquent brickworks must pay off 15% of their current debt, before EGAS will consider rescheduling the remaining amounts over 60 installments throughout the next five years. EGAS waived late charges of interest rate on overdue bills ranging from 10.5% to 11.5%.
In a related statement to Al Borsa, Salah Al Sebaie, the Head of the Brick Manufacturers Association, said that 50% of the factories were out of business and in the process of selling their facilities. He estimated the average debt per plant to be around EGP 3m. Sebaie said that EGAS had agreed to re-evaluate the outstanding invoices in Egyptian Pounds instead of US Dollars, after deducting 10% of the amount, and reduce the price of gas. Yet, he concluded that EGAS did not honor this agreement, and therefore the brickworks will not move forward with the proposed rescheduling.
In April, EGAS agreed to supply gas to the brickworks at a fixed rate of $5 per 1mTU, with a forward hedged exchange rate of $1 equating to EGP 7.52.