"(Business in Cameroon) - The sector has been struggling over the past two years. But since the end of 2019, the government has decided to grasp the nettle and start resolving the financial imbalance in the sector.” This is the comment from the general management of ENEO, concessionaire of electricity distribution in Cameroon, in reaction to a CFAF45.7 billion transfer it received several weeks ago from the state via an undisclosed banking consortium.
"We must praise the Cameroonian government’s decision, during the consultations led by the Prime Minister, to settle the first batch of certified invoices for a total of CFAF 45 billion through the issuance of T-bonds (fungible treasury bonds). This will enable the injection of fresh money into the sector," Eric Mansuy, ENEO’s MD, said during an interview published on February 11, 2020, by the online newspaper Energie Médias. This is now a kept promise.
As of December 31, 2019, the energy company estimated the volume of debts owed to it to over CFAF180 billion (including CFAF63 billion owed by public or publicly-owned companies alone). After this payment, the general management is currently unwilling to communicate the new stock of the state’s debt indicating that the certification operation is still underway. "The debt has evolved positively,” it stated. With the "government’s support," "positive" progress has also been recorded as far as the debts owed by public enterprises are concerned.
Eneo has always relied on the large volume of its receivables to justify its large supplier debts. From 2018 to 2019, those receivables dropped from CFAF 171 billion to CFAF 150 billion. However, this decrease of CFAF 21 billion over one year was not enough to restore confidence in the sector. On the contrary, the electricity distributor was taken to court, in November 2019, by Tradex, one of its fuel suppliers, for about CFAF52.7 billion debt.
Now, however, the crisis is reportedly decreasing. According to the internal communiqué that sanctioned the meeting of Eneo's board of directors, on June 17, 2020, in Yaoundé, the CFAF 45.7 billion transferred by the state "helped launch the restoration of trust in the sector, as the sums thus raised were used to clear part of the debts owed by major players in the sectors (Sonara, Globeleq Cameroon, SonatreL, EDC, etc.) (…) Also, other operators have agreed to negotiate moratoria or new schedules for the settlement of their debts."
"Now, whether it is with fuel suppliers or energy suppliers such as Kribi or Dibamba, we are rather in very constructive relations for the settlement of their debts. With the government’s support, we are even part of projects initiated by new operators that wish to enter the sector and contract with Eneo. So, from our point of view, we don't have any problems with suppliers," the top management added.
The Gaz du Cameroun case
Nevertheless, things are not as rosy as they appear. For instance, Gaz du Cameroun (GDC) announced, in early July 2020, the termination of its contract to supply natural gas to Eneo, through the Logbaba (30 MW) thermal power station in Douala. The subsidiary of British company Victoria Oil & Gas (VOG), is demanding the payment of about $16 million of debt (over CFAF9 billion) and even threatened to take legal actions against ENEO.
ENEO, however, indicates that it is surprised by this announced termination first because "Gaz du Cameroun stopped producing energy for ENEO since September 2019."
Indeed, on September 14, 2019, invoking the debts owed to it by GDC, Saudi company Altaaqa Alternative Solutions, which operates the Logbaba thermal power station, shut down its production. This immediately led to the disruption of fuel supply by GDC. Eneo, therefore, wonders what the over CFAF9 billion debt demanded by VOG’s subsidiary is about.
Secondly, "for several months now, Eneo has invited the teams of Gaz du Cameroun to formalize the new contract that would bind us. And Gaz du Cameroun was then to work with its production partner to obtain the licenses and authorizations to resume its activity, following the government’s instructions."
"We have a partner that had obligations but did not fulfill them. It did not provide us services but is demanding payment. What is this about? We are also wondering,” ENEO’s management reacted.