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* Payment of 1st tranche consistent with government timeline
* $1.2 bln to be paid in US dollars, rest in Egyptian pounds
* Repayment key to restoring investor confidence
CAIRO, Dec 23 (Reuters) - Egypt will complete payment thisweek of $1.5 billion of the $6.3 billion it says it owes oilfirms, a state executive said on Monday, in line with a planaimed at restoring confidence in an economy hit by nearly threeyears of political turmoil.
"Today we are reimbursing $1 billion to the foreign partnersand the rest during this week," the chairman of state-runEgyptian General Petroleum Corporation (EGPC), Tarek El Molla,told Reuters by telephone.
Approval of the $1.5 billion payment was announced by thegovernment on Dec. 4. The government said the next day it wouldrepay a further $3 billion in monthly instalments until the endof 2017, hoping this will encourage needed investment in theenergy sector.
Molla said $1.2 billion of the initial tranche is being paidin U.S. dollars and the remaining $300 million in Egyptianpounds, as officials had indicated.
He said the government was working on a plan for fullrepayment of the $6.3 billion it says it owes.
Molla had previously told Reuters that "satisfying" foreignpartners was essential to the government's strategy ofencouraging foreign oil companies in the country to increaseexploration and production in exchange for a more rapidrepayment of the money it owes them.
Financial disclosures by firms including BP, BG Group, Edison SpA, TransGlobe Energy, Eni and Dana Gas show Egypt owed them more than$5.2 billion at the end of 2012. Industry sources have indicatedthe total sum owed is likely to be much higher.
Egypt has been delaying payments to firms because politicalupheaval since the overthrow of President Hosni Mubarak in 2011has battered its economy, frightening away tourists andinvestors, and cutting into tax revenues.
Some of the debts were incurred before the 2011 revolt.
Authorities have repeatedly promised to repay arrears sincethe army toppled then-President Mohamed Mursi on July 3 andafter oil-producing Gulf Arab states, which fiercely opposed hisMuslim Brotherhood, promised financial support to Egypt.
In the week after the army takeover, Saudi Arabia, Kuwaitand the United Arab Emirates pledged a combined $12 billion ingrants, interest-free loans, and oil products.
