Yaoundé - 02 October 2023 -

Palm oil refinery: Four new operators to soon become operational, despite short raw oil supply

Palm oil refinery: Four new operators to soon become operational, despite short raw oil  supply
  • Comments   -   Tuesday, 29 August 2023 13:07

(Business in Cameroon) - Four new palm oil refiners will enter the Cameroonian market in the coming months, according to sources inside the Oilseeds Refiners Association (ASROC).  These newcomers include Société de raffinage du Cameroun (SORAC) and Nouvelle Raffinerie du Cameroun. SORAC, which aims to market 100,000 tons of refined oil yearly, is controlled by businessman Nassourou Alhadji Issa. As for Nouvelle Raffinerie du Cameroun, it is controlled by Fabrice Siaka, the promoter of the SODINAF, the group that took over the assets of French forestry company Rougier in Cameroon and the CAR in 2018.  

These four agro-industrial units will join Novia, which launched its activities in the Bonabéri industrial zone in Douala, around 5 months ago. Thanks to an investment of more than CFAF50 billion, this agro-industrial complex became operational after more than two years under construction. It has created more than 300 jobs, with a daily production capacity of 500 tons of refined oil and eight tons of soap, according to company sources.  

With its oil brand "Oleo" and soap brands "Uno" and "Jazz" that are already available in markets and supermarkets across Cameroon, Novia, and the newcomers are expected to boost competition in the oil refinery sector, which is already short of raw materials. This supply shortfall forces operators to import massive quantities of crude palm oil. "In the first half of 2023 alone, refiners have [...] imported around 150,000 tons of palm oil, equivalent to the total volume imported in [...] 2022,” says a source inside the palm oil refining industry.  

A worsening structural deficit

For many years now, as a result of the faster increase in processing capacity than in crude palm oil production capacity in the country, Cameroon has been running an annual structural deficit, which peaked at 160,000 tons in 2022, from 130,000 tons in 2020. "The structural deficit [...] we always mention is a nominal deficit which is different from the actual deficit. This nominal deficit is calculated by taking just 50% of the capacity of processing plants. When we consider the real capacities of processing plants, the gap is indeed way wider,” explained Emmanuel Koulou Ada, Head of the Oilseed Sector Regulatory Committee, in 2018.

 According to the ASROC, the yearly crude palm oil demand from industrial crude palm oil processing units, whose number is growing, now exceeds a million tons.   However, according to the Ministry of Agriculture, local supply has risen from 343,000 tons in 2014 to 413,000 tons in 2018. According to the central bank BEAC, it will reach 450,000 tons in 2024.  To solve the ever-growing supply shortage, the Cameroonian government introduced a quota policy based on which industrial production (production from village plantations is not concerned, editor's note) is distributed to processors, depending on their installed processing capacities.

A criticized quota policy

"Quotas on local raw materials should not exist in a liberal economy. It's more understandable for an imported raw material," criticizes an authorized source within the industry.  Indeed, critics against that policy are growing with some operators believing that it establishes a kind of unfair competition.  "De facto, between two operators, the one with a larger quota, or a quota that is often double or even triple that of its competitor, as is currently the case, can grow faster. The competitor will not be able to compete no matter the investments, innovation, and marketing practices,” our source points out.  

In order to supplement the quotas allocated to them by industrial producers of crude palm oil, refiners often turn to the owners of village plantations, whose acreage is almost double that of industrial plantations in Cameroon. But, as we learn, the quantities of palm oil captured from these producers, who generally have artisanal presses with palm oil extraction rates well below those of industrial producers, are really low. This is all the more true given that, according to a source inside the industry, the bulk of the palm oil from artisanal presses, which are scattered in and around village palm groves, is destined for soap factories. Indeed, according to industry players, these processing units allow the use of lower-quality crude palm oil, which is not the case for refineries.

"Insofar as almost all the oil produced in artisanal presses is bought by soap factories, there's no reason to allocate the same quotas of industrial production to refiners and soap factories. Given the quality of the oil needed by soap factories, it would be wiser, for example, to allocate imported crude oil to soap factories, and dedicate the quality crude palm oil produced in the country’s industrial plantations to refiners,” an operator suggests. 

Brice R. Mbodiam       

Cameroon National Shippers' Council (CNCC) inaugurated last September 27 a community center in Kouseri, Far North, for the purpose of resting and...
The Bank of Central African States -BEAC- noted a good momentum on the primary public securities market throughout the year, despite a constant increase...
The Cameroonian Trade Department announced the introduction of a special facility to support the population in this tough economic context. Minister Luc...
Cameroon’s national refinery- Sonara signed last September 29 a deal with Trafigura PTE LTD to restructure CFA14 billion owed to the Swiss trader. Per...

Mags frontpage

Business in Cameroon n110: April 2022

Covid-19, war in Europe: Some Cameroonian firms will suffer

Albert Zeufack: “Today, the most important market is in Asia”

Investir au Cameroun n120: Avril 2022

Covid-19, guerre en Europe : des entreprises camerounaises vont souffrir

Albert Zeufack: « Le marché le plus important aujourd’hui, c’est l’Asie »