Uncertainty to Cameroon’s power supply: Eneo’s debt standoff threatens prolonged blackouts ⁰

As of September 2023, Eneo reveals receivables from the public sector, including the government and other public entities, totaling CFA234.5 billion, based on an internal document read by Business in Cameroon. Although CFA43.1 billion has been paid this year, CFA 131.7 billion is still owed by the central government, CFA55 billion by public enterprises, and CFA47.8 billion by other public entities.

Eneo claims that the amounts owed by the Cameroonian government have increased by CFA38.5 billion since the letter sent on April 14 to the Cameroonian Prime Minister, Joseph Dion Ngute, by Actis, the majority shareholder of Eneo (51% of the shares). In this letter signed by David Grylls, a partner at Actis, the British investment fund estimated the debt of the public sector to its local subsidiary at CFA186 billion.

The Cameroonian government promptly contested this sum, leading to the establishment of commissions to determine the public sector’s debt to Eneo. However, according to the communiqué released after the electricity company’s board meeting on December 7, 2023, in Yaoundé, this process remains unfinished several months later. The communiqué states, “Management has been urged to persist in dialog with the regulator to address outstanding matters, including the acknowledgment of Eneo’s investments, tariff compensation, and public lighting.”

Compensation and public lighting billing have always been the subject of fierce negotiations between Actis’ subsidiary and the government. To better understand, it should be noted that tariff compensation (consumer subsidy supported by the state, representing the difference between the actual cost of the kilowatt-hour and what the consumer pays) depends on several factors, including the level of investment made by Eneo, the evaluation of which is still the subject of lengthy negotiations with the government. Moreover, in cities without a modern public lighting network, consumption is estimated based on the number of identified street lamps. However, municipalities and Eneo still struggle to agree on the number of functional street lamps over a given period, often requiring counter-expertise.

Year-end celebrations with power cuts

Eneo estimates tariff compensation as of the end of September 2023, at CFA75 billion and the public lighting bill at CFA68.8 billion. This means that out of the CFA234.5 billion claimed by the electricity company from its reference shareholder (44% of the shares), only CFA90.7 billion is already consolidated. Uncertainty continues to weigh on an amount of CFA143.8 billion, or more than 61.3% of the total amount.

For several months, discussions between Eneo and the government have been ongoing to settle part of the public debt owed to the electricity company. The issue, presented as an “emergency,” was at the center of the board meeting on December 7. “The directors were assured of the government’s full support in finding rapid solutions to the sector’s urgent payments,” reads the press release signed by Séraphin Magloire Fouda, Chairman of Eneo’s Board of Directors.

But, according to our information, nothing concrete has been achieved to date on this issue. The structuring of an operation to monetize part of the state’s debt to Eneo is mentioned to allow the company to settle part of its debt to its suppliers. Especially since “nothing concrete on the amount and timing of the monetization operation is determined,” independent power producer Globeleq, which claims up to CFA107.7 billion from Eneo, has stopped its 304 MW installed capacity plants for the second time since December 1, 2023, causing power cuts lasting more than six hours.

The financing of the monetization operation is one of the sticking points that is blocking the operation. The Actis subsidiary, which has borne these charges representing between 7 and 8% of the amount to be raised, now refuses to do so. And on its side, the state does not seem willing to bear them either. Hence the deadlock, which should maintain tension in the country’s electricity supply during the year-end celebrations. Sources close to the matter revealed that the situation will worsen during the dry season. For example, at the peak of the low-water period, the Memve’ele hydroelectric plant, with an installed capacity of 211 MW, often produces zero watt-hours at certain times of the day, due to the lack of water flow to turn its turbines.

Source: Business in Cameroon