(Business in Cameroon) - The 20% increase in industrial gas prices decided by Gaz du Cameroun (GDC) has been suspended. The suspension was announced by Minister of Commerce Luc Magloire Atangana (photo) after a consultation meeting held in Yaoundé last July 13.
The price increase was announced by GDC on May 15, 2023, with the decision to become effective on June 1st. GDC explained it was due to an increase in its production costs, which shot up because of international factors. The decision sparked a dispute between the gas supplier, and its customers, who vehemently opposed it. The government also requested GDC should suspend it pending approval as stated in decree no. 2023/232 of May 4, 2023, which outlines the guidelines for the application of the petroleum code law no. 2019/008 of April 25, 2019.
However, GDC did not budge the least. In a letter to the president of the Association of Industrial Gas Consumers on June 6, 2023, its Managing Director, Éric Friend, indicated the 20% price increase would be maintained.
According to authorized sources, during the July 13, 2023 consultation meeting, Gaz du Cameroun indicated that it was not bound by the 2019 petroleum law and its implementing decree but by the investment agreement it signed with the Cameroonian government in 2009.
In short, it was rejecting being subjected to the obligation of getting its pricing decisions approved by the government. To counter that argument, Minister Atangana pointed at a provision of the said investment agreement that formally requires GDC to negotiate any price increase with the government, notably through the national oil corporation SNH and the Ministry of Mines.
Based on this provision, Minister Mbarga Atangana suspended GDC's decision to raise prices for industrial users starting from June 1, 2023. The minister invited the company to comply with the regulations in force in the country, either by adhering to the provisions of the 2019 petroleum code, which require prior price approval by the Ministry of Trade before any increase, or by respecting the investment agreement signed with the State in 2009, which recommends prior negotiation between the State and the gas producer before any price adjustment. This decision should be reflected in the invoices for June 2023, which GDC has yet to send to its thirty or so clients in the Douala-Bassa industrial zone, as of July 18, 2023.
Rising production costs
The backlash against the increase in gas prices for industrial users stems from the fact that it would further inflate production costs for companies. This comes after the 2023 finance law extended the special tax on petroleum products to natural gas. Consequently, consumers of this product now have to pay a tax of 70 CFA francs per cubic meter of gas consumed.
This measure coincided with the Electricity Sector Regulation Agency (Arsel) also increasing electricity rates by nearly 30% for "large accounts" customers, which includes energy-intensive industrial enterprises. Additionally, since February 1, 2023, the prices of gasoline, diesel, and super used by industrial users have also increased, with price hikes of 15.8%, 25.2%, and 36.5%, respectively.
Brice R. Mbodiam