(Business in Cameroon) - On December 31, 2020, electric utility ENEO completed the mobilization of XAF100 billion from a pool of eight local banks led by Citibank. This was revealed by an authorized source within the bank but, the latter provided no details on the conditions of the loan or the subscribing banks.
Authorized by the board of directors of this company in January 2020, the operation was to be carried out after an improvement of ENEO’s borrower profile. Indeed, at the time, ENEO was facing cash flow problems due notably to its largest clients' (including the state and its agencies) unpaid bills. As a result, the electric utility was no longer able to honor its commitments toward service providers like independent power producers and fuel suppliers. In its 2019 operation report, ENEO explained that its debt towards those independent power producers and fuel suppliers was XAF155 billion.
In that context, “we needed to reassure the financial market about Eneo’s capacity to meet payment deadlines and prove that the state of Cameroon can regularly pay its invoices (…),” said Éric Mansuy (ENEO’s general manager ) in an interview with Business in Cameroon.
A boost from the State of Cameroon
As desired by the CEO of Eneo, the financial market was reassured in June 2020 with the State of Cameroon’s release of XAF45 billion as an advance on the bills it owed the utility. Another XAF30 billion tranche was also announced.
"With the XAF45 billion we received [ed. note: in June 2020], and the regular payment of state’s invoices over the first five months of this financial year, negotiations for the XAF100 billion loan were effectively launched,” Eric Mansuy later said.
"The settlement of these arrears and some other indicators confirm the government is committed to supporting ENEO. When combined with the corporate government transformation initiated by Actis, ENEO’s reference shareholder, we can say that this is a sound operation," a banker explained when ENEO was preparing its loan operations.
In a recent newsletter, the electric utility revealed that the funds thus raised will be used to settle its medium-term debt and fund additional investments (production and distribution investments mainly). It should also help Eneo recover from a 2019 financial year marked by a difficult financial situation and a 2020 financial year marked by the coronavirus pandemic, which forced the electric utility to reduce its investment budget by over XAF21 billion (from XAF67 billion initially to XAF45.7 billion).
Brice R. Mbodiam