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Cameroon: Domestic gas subsidies were down by XAF4.7 bln YoY at end-Sep 2020

Cameroon: Domestic gas subsidies were down by XAF4.7 bln YoY at end-Sep 2020
  • Comments   -   Tuesday, 05 January 2021 13:41

(Business in Cameroon) - Over the first nine months of 2020, the National Hydrocarbons Prices Stabilisation Fund (CSPH) spent XAF13.2 billion to support the retail price of domestic gas in Cameroon, we learned at the end of the 46th session held by the public agency on December 30, 2020.

Officially, that subsidy is down by XAF4.7 billion compared with the XAF17.9 billion spent over the same period in 2019 for that purpose. In 2017 and 2018 respectively, the subsidies were XAF32 and XAF35 billion, according to figures published by the CSPH.

Despite the unavailability of the volume of the Q4-2020 domestic gas subsidies in the country, we can deduce that the volume significantly dropped over the past three (3) financial years (2018-2020). This drop could be due to the decreasing gap between the import costs (which is on a downtrend move) and the retail prices of domestic gas (which are subsidized and therefore stable). Indeed, according to the CSPF, the gas (12.5-kg cylinder) Cameroonians were buying at the subsidized price of XAF6,500 over the past ten years cost between XAF10,000 and XAF11,000. This means that the state usually spends between XAF3,500 and XAF4,000 to subsidize each of those cylinders, via the CSPH. This price difference is likely reducing, explaining the decreasing subsidies.

It could also be due to the rise in local production (because of the floating LNG unit Hilli Episseyo which started operations in early 2018).

Let’s note that even though it is a domestic gas producer (through Sonara, which stopped production after part of its plant was destroyed by a fire outbreak in May 2019, and Hilli Episseyo), Cameroon still imports 80% of the local consumption. The difference between the actual cost of the imported gas and the retail price is subsidized by the CSPH, allowing access to the product for everyone.

Brice R. Mbodiam

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