(Business in Cameroon) - Since the 2014 fiscal year, Sonara has been in a bankrupt situation according to the Technical Commission for the Rehabilitation of Enterprises in the Public and Para-public sectors (CTR).
The CTR made that comment in its 2019 report on the state of state-owned firms and institutions by December 31, 2018. According to the report, this situation is under article 664 of the Ohada Uniform Act relating to Commercial Companies and Economic Interest Groups. At that date, it informs, SONARA’s equity was less than half of its share capital.
According to the CTR, during the said fiscal year, SONARA’s equity was estimated at XAF-60.35 billion. At the same time, its share capital went down from XAF32.5 billion to XAF19.5 billion.
The commission indicates that the refinery constitutes a budgetary risk for Cameroon. Indeed, it informs, In H1, 2019, the national debt committee (CNDP) authorized Sonara to agree to the $160 million loan Vitol was offering. This loan was to refund what the refinery owed crude oil suppliers since 2013 and fund its operating costs, which increased when SONARA’s production capacity rose from 2.1 million to 3.5 million tons.
The loan increased the budgetary risk of SONARA, whose short term commitments were XAF898.38 billion. Furthermore, the refinery’s indebtedness was exacerbated by the May 31, 2019 fire at its Limbe plant.
For the CTR, "the current situation foreshadows cases of debt default, for which the liability of the company's shareholders (first and foremost the State) should be called upon.”
“Given this risk, it is important to avoid Sonara's debts to local banks being classified as doubtful debts. If classified as such, it could affect the credit institutions’ financial situation and prevent them from complying with the prudential standards of the COBAC [Central African Banking Commission],” the commission adds.
Sonara is a semi-public company created on March 24, 1973. Four percent (4%) of its shares are owned by Total and 96% by Cameroon. It is a Simple Topping/Reforming Refinery initially built to process Arab light crude. Currently, however, Cameroon is producing heavy crude. There is then the mismatch between the infrastructure available at the refinery and the type of oil being produced. This is the reason Cameroon regularly imports oil products.