(Business in Cameroon) - Last weekend, Minister of Finance Louis Paul Motazé signed a document establishing the assumption of aluminum producer ALUCAM’s debt, owed to electric utility ENEO, by the government of Cameroon, a source close to the case reveals.
In early 2020, ALUCAM and ENEO signed a contract computing the aluminum producer’s overall debt by December 31, 2019, to XAF40 billion. However, according to the source, the decision signed by Minister Motaze includes the XAF40 billion debt and also the unpaid bills accumulated by ALUCAM since mid-2020. As a matter of fact, in a recent interview with Business in Cameroon, ENEO’s CEO, Eric Mansuy, revealed that ALUCAM was experiencing cash flow problems because, since mid-2020, it seldom pays its electricity bills.
The volume of the debt accumulated is not revealed but, according to sources close to the case, the aluminum producers’ monthly electricity bill averages XAF2 billion. This means that within six months, the company would have accumulated XAF12 billion unpaid electricity bills (if to consider that it paid no bills during the period). Overall, ALUCAM’s unpaid electricity bills assumed by the government of Cameroon will surely exceed XAF50 billion.
Fiscal balance concerns
Apart from providing additional cash to ENEO, the effective payment of this debt will restore financial equilibrium in the electricity sector in Cameroon. However, this debt assumption will reinforce international financial partners and rating agencies' concerns about the threat constituted by public corporations’ debts on the country’s budget balance.
ALUCAM has been facing cash flow problems since December 2014, when its strategic partner Rio Tinto divested from it by selling (in 2015) the 46.7% stakes it had in ALUCAM to the government of Cameron, which became then the sole shareholder. Since then, Cameroon has been trying to attract a new investor for the aluminum producer whose performances are continually declining. Indeed, according to the Bank of Central African States (BEAC), between 2017 and 2020, ALUCAM’s exports had dropped by half, going from 80,000 tons (in 2017) to just 49,000 (in 2020). The same source revealed that the downward trend observed in those exports was already established since 2010.
Nevertheless, with the drop in production recorded comes a substantial reduction of the company’s electricity consumption, which went from 200 MW to 130MW nowadays. Therefore, the electricity bill is reduced compared to what it could have been if ALUCAM’s production was at its peak.
Brice R. Mbodiam