(Business in Cameroon) - Electric utility ENEO projects an average of XAF33 billion of accumulated earnings and profits yearly over the coming five (5) years. Indeed, the company (which recorded losses in 2019 and should be unprofitable in 2020 because of the coronavirus pandemic) projects about XAF165 billion of accumulated net earnings over the 2021-2025 period.
A source close to the case indicates that in that regard, ENEO’s turnover will exceed XAF500 billion in 2024 and get close to XAF580 billion in 2025.
This is a difficult task for the company (owned by British Actis) since to achieve it, it counts on a rise in the number of its clients and an increase in prices (because new actors have entered the energy value chain causing the cost per kilowatt-hour to rise).
Despite a rise by over 10% in ENEO’s 2019 turnover, the unaudited results show that the financial year was unprofitable. The profit margins were reduced because of rising fixed and variable expenses.
One of the reasons provided by ENEO to explain the result is that the launch of some dams was delayed calling for investments in some expensive alternatives. The company also had to deal with an exceptional and nonnegligible fiscal expense.
To achieve its projected profit, ENEO will also have to reduce its operational costs and frauds (that cause the sector to lose about XAF60 billion every year). And justly so, to reduce frauds, it is moving towards modern meter reading methods instead of manual readings.
Nevertheless, the company’s cash flow is gradually becoming sustainable. For instance, the State of Cameroon recently paid XAF45 billion, as the first tranche of payment arrears, to ENEO. Another tranche of XAF30 billion (instead of XAF23billion) is planned to be paid. All those payments will help Eneo equilibrate its balance sheet.
Also, the government should pay the bills for energy transport infrastructures taken over by Sonatrel. The amount has not been decided yet but, it could reach XAF45 billion.
Even though it was able to fund its current expenditures thanks to the confidence it enjoys within the local banking sector, the payments from the State of Cameroon were enough to give Eneo room for manoeuver in its bid to raise XAF100 billion on the local debt market. The company also plans to gradually reduce its debt and end its recourse to short-term bank loans by 2023.
ENEO’s financial well-being has become a shared objective for all stakeholders. However, the materialization of the company’s ambition will depend on the discipline in the implementation of a 5-year investment plan and the State of Cameroon’s capacity in fulfilling its commitments as the second-largest shareholder.