Fund fuels oil profits
THERE ARE BIG CHANGES AHEAD IN CAMEROON'S ENERGY SECTOR AS PRIVATIZATION, THE EXPLORATION OF UNTAPPED RESOURCES, AND VENTURES SUCH AS THE CHAD-CAMEROON PIPELINE GET UNDERWAY

Ibrahim Talba Malla Director of CSPH

The economic liberalization currently underway in Cameroon is making no exception for the profitable energy sector, which seems poised for expansion as privatization goes forward.
Cameroon still has major untapped oil reserves–although petroleum already accounts for one sixth of the country’s $7 billion economy–as well as tremendous potential for generating additional hydroelectric power.
The energy sector, which draws in 77% of all foreign direct investment, is due to take an enormous leap forward with the construction of a 650-mile oil pipeline running to Cameroon’s Atlantic coast from fields in neighboring, landlocked Chad.
In order to make more room for private enterprise, the state agency in charge of the petroleum sector, the Fund for the Stabilization of Hydrocarbon Prices (CSPH in its French acronym) will cease to function as a public holding company and will limit itself to a conventional regulatory role.
“We are going to disengage from the oil sector because we cannot both judge and be judged. We must withdraw and play the role of referee,” explains the director of the CSPH, Ibrahim Talba Malla.

The Fund was set up in 1974, in response to the oil crisis of 1973, with the primary purpose of ensuring that even the poorest households could afford essential fuels, such as kerosene and propane gas.
The government wanted the Fund to invest in the sector, Mr. Talba Malla recalls, because at that time “there were no national savings and the banking sector was not easily granting loans to private operators. So public entities with some resources were used to invest and catalyze the economy.”
But as time has passed and liberalization has advanced, “prices are more and more freely fixed on the market,” he notes. “Transport, too, is freely negotiated between economic actors in charge of selling fuel and those in charge of transport.”

“With liberalization,” continues Mr. Talba Malla, “we need to open up the market to new operators and to focus the Fund’s efforts not on controlling prices but rather on ensuring the regularity of supplies for the population.”
That means privatizing state-owned companies, and opening up distribution to independent operators, in addition to the multinational giants such as Mobil, Texaco, Elf or Shell. Refinery operations can also be undertaken by private enterprise, under certain conditions related to investment levels and technology transfer.
But the most striking recent development for the energy sector is the massive undertaking, backed by the World Bank group, to build the Chad-Cameroon oil pipeline and develop Chad’s Doba oil fields.

The construction of the pipeline, running from the Doba fields to offshore oil-loading facilities off the coast of Cameroon, will cost $2.2 billion, while the investment required to develop the oil fields in southern Chad is estimated at around $1.5 billion. The project is being undertaken by a consortium of industry heavyweights, headed by ExxonMobil, the operator and majority stake-holder, with 40% of the private equity. Malaysia’s Petronas will put up 35% of the private capital and Chevron the remaining 25%.
Mr. Talba Malla sees the project as “a strong signal.” He points out that “it has been many years since sub-Saharan Africa has had a project of this scope and from countries which do not traditionally
invest in Central Africa.”