KUWAIT: Kuwait’s sovereign wealth fund and state-owned Kuwait Petroleum Corporation (KPC) reached an agreement under which KPC will pay 8.25 billion Kuwaiti dinars ($27.44 billion) in accrued dividends over 15 years, two sources said.

KPC has owed for years about 7 billion Kuwaiti dinars in dividends to the General Reserve Fund (GRF), one of Kuwait’s sovereign funds, tasked with covering budget deficits.

The company and GRF have recently agreed a repayment schedule by which KPC will pay 550 million dinars ($1.83 billion) annually to the GRF during the next 15 years, said a government source and a source familiar with the agreement.

The move will inject cash into the oil-rich Gulf state’s coffers, squeezed by the coronavirus last year and a continued stand-off between government and parliament on implementing measures such as a law to allow state borrowing.

GRF and KPC had agreed a repayment schedule in recent years, but GRF wanted to review it and accelerate it as part of government efforts to cover the deficit, sources have previously told Reuters.

The total amount due has gone up to 7.75 billion dinars as KPC stopped paying instalments to GRF in recent months while the two sides were negotiating, the government source said, adding that the final amount includes 500 million dinars in fees.

“The two parties have signed on that, but there is an implicit understanding that if KPC has more money it can pay it faster... We do not want to put more pressure on them, but 550 million annually is what has been agreed upon,” the source said.