Yaoundé - 28 May 2022 -

Sonara: Government officializes repayment plan for XAF261.4 bln owed to 9 local banks

Sonara: Government officializes repayment plan for XAF261.4 bln owed to 9 local banks
  • Comments   -   Friday, 15 October 2021 16:05

(Business in Cameroon) - Today October 15, in Yaoundé, Minister of Finance Louis Paul Motaze is presiding over the officialization of a repayment plan for a XAF261.4 billion debt (both principals and interests) owed by Société Nationale de Refininage (Sonara) to a group of nine banks. The said banks are UBA Cameroon, BGFI Bank, Afriland First Bank, Ecobank, Société Générale Cameroun, Standard Chartered Bank, CCA-Bank, Bicec and CBC.

"This restructuring plan is part of a process aimed at reducing the long-term debt by consolidating and rescheduling them for more favorable terms thanks to the guarantees provided by the State of Cameroon,” the Minister of Finance explains in an attempt to reassure the public, which could be concerned about the impacts of the restructuring plan on the state budget. 

According to our information, the new repayment deadline is 10 years while the pre-tax interest rate is 5.5%. During the repayment deadline, the debt will be amortized monthly.

Escrow account

This restructuring plan is part of the solutions suggested in March 2020, by a public-private workgroup set up by the government. The solution they suggested was to be implemented for the debts owed by Sonara to both local banks and international traders that supply petroleum products to Cameroon. According to a briefing note published by Cameroon in June 2021, in preparation for its 2015 Eurobond refinancing operation, four key actions were suggested. Specifically, an escrow account was to be opened at the BEAC. A XAF47.88 subsidy per liter of petroleum products sold was to be deposited into that escrow account to support the national refinery company (Sonara). Also, a fixed margin of XAF16 and a guaranteed 80% market share were to be dedicated to Sonara thus allowing it to have sufficient margins to refund its debts. 

Close to XAF80 billion is expected to be deposited in the escrow account that will remain open throughout the 10 years amortization period. To replenish the account, the Cameroon Company of Petroleum Depots (SCDP) was tasked to charge a total of XAF6.5 billion to oil marketers nationwide monthly. Those charges were to be transferred into the escrow account but, according to the government, between July 2020 and April 2021, XAF76.3 billion was effectively transferred into the escrow account. The authorities add that between January and April 2021, XAF59.3 billion was used from the account to make provisional payments to local banks (XAF31.2 billion) and international traders (XAF28.1 billion). 


The agreement for the restructuring plan was reached in September 2020, and the October 15, 2021, officialization, several problems are solved for the banks involved.

Indeed, with the officialization of that plan, the said banks are relieved from the obligation to allocate part of their equity to cover the huge debt Sonara owes them (at end-2020, the unpaid loans in local banks’ portfolio was XAF784 billion, one-third of which was accounted by Sonara). 

Since the repayment plan is now officialized with banks, Sonara will focus on a plan for the debts owed to traders (XAF312 billion as of end-April 2021). Recently, authorities told US rating agency S&P Global Ratings that negotiations for that purpose are progressing. 

There are other debts and claims to be focused on. The State of Cameroon was sued by a subsidiary of commodity trader Glencore in the UK over its refusal to pay a sum of XAF75.6 billion. A first court hearing was scheduled for end-July 2021. There is no update but  Cameroonian authorities have demonstrated their resolution to dispute that claim. 

Also, repayment mechanisms of the refining company’s tax debt (XAF172.9 billion as of end-July 2021) and the amount it owes local contractors are not publicly discussed. Another unknown aspect of Sonara’s debt management is the contribution of foreign shareholders that control 19.7% of the national refinery’s capital. 

Sylvain Andzongo & Idriss Linge

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