A consortium of local banks is set to secure a LE10 billion loan ($1.4 loan) for the Egyptian General Petroleum Corporation to pay back debts to foreign oil companies, a source from the petroleum sector told Al-Ahram's daily newspaper.

The consortium will include four banks and will be led by one of Egypt's biggest, the source said, adding that 25 percent of the loan will be in US dollars.

According to Al-Ahram, the contract will be signed next week so that part of the debt to the foreign companies can be paid by the end of September or early October.

A source previously told Ahram Online that the petroleum ministry had planned by this September to pay LE10.5 billion ($1.5 billion) to companies including BG group and British Petroleum.

Oil Minister Sherif Ismail has also announced that Egypt is looking to borrow at least $1.5 billion from local and international banks in order to repay the debt owed to foreign oil companies operating in the country.

The government is working to get firms to invest in extraction and exploration, activities desperately needed to help address a severe energy crunch.

Egypt has been in an energy crisis over the past three years, most evident in frequent electricity blackouts. Several government officials have attributed the power cuts to fuel shortage and declining gas production.

The government says that paying the debt will open the door to foreign investment.