Energy in Cameroon
Comparing the survey results of 2019 and 2020, Cameroon’s energy leaders point to greater uncertainty around issues that influence or depend on the country’s economic performance, such as corruption, energy prices and the ability to finance hydro capacity expansion. The Action Priorities section suggests a focus on inclusive and alternative measures to improve energy access.
Hydro continues to lead the Critical Uncertainties area. The previous year’s concerns about ensuring that finance is available for large hydro projects remains a focus. These projects are critical to the country’s objective of becoming a net electricity exporter by 2035. Letters of intent continue to be signed for hydro capacity expansion such as the Grand Eweng hydropower project. Progress has also been achieved in securing a US$500,000 grant for feasibility studies for the Kpep hydropower project.
Corruption moves from Action Priority to Critical Uncertainty. This year’s increased uncertainty may reflect how perceptions were influenced by the removal of Cameroon’s eligibility status under the U.S. African Growth and Opportunity Act (AGOA) due to endemic corruption and the post-electoral crisis. The country has also been denied the right to host the 2019 Africa Cup of Nations due to budget corruption allegations. The project would have brought infrastructure and job opportunities.
Electricity Prices are perceived with increased uncertainty, reflecting worries around oil product prices as a result of a fire in late May 2019 at Sonara, the country’s only oil refinery. While Cameroon has significant hydroelectric potential, 43% of total electricity production comes from oil and LPG. The fire led to concern about the impact of the accident on fuel supply, with repercussions on electricity and transport prices.
Energy Subsidies are seen with greater impact and lead the Action Priority section. 2019 saw an increase in government oil and gas subsidies to compensate for demand growth and price increases. The added pressure on the state budget is being eased through a World Bank funding agreement for US$200 million to support fiscal consolidation and inclusive growth. Key objectives include improving the financial sustainability of the energy industry and improving private sector confidence.
Decentralised Systems are less of an uncertainty and become an Action Priority, reflecting active expansion of government-funded solar systems and PV plants to extend energy access. These include a 10MW project in Guider in North Cameroon and a 15MW facility in Maroua, in the far north region. Incremental capacity has come from the installation of solar-powered satellite TV kits in 300 villages donated by the Chinese government.
Market Design is perceived as having increased impact. The structure of the electricity market is expected to change in the short- to medium-terms, especially with the adoption of the Renewable Energy Law. However, the newly created electricity transmission company (SONATREL) and the gradual expansion of the local solar industry with rural electrification projects are perceived as early signs of the changing structure of Cameroon’s electricity market.
Cameroon’s energy landscape has shown an overall stability in the last three years, with some significant issues remaining priorities. Currently, the government has embarked upon multiple parallel efforts to develop new hydropower infrastructure, but the energy sector remains slowed down by corruption and economic stagnation. Other key aspects to watch in 2019 are the impacts of energy efficiency initiatives and the completion of new hydropower plants on the energy access rates. Exchange rates and extreme weather risks are key uncertainties darkening the long-term future of Cameroon’s power sector.