(Business in Cameroon) – The Governor of the Bank of Central African States (Beac), Yvon Sana Bangui, urged Cameroonian authorities to speed up the rehabilitation of the country’s oil refinery, Sonara. Speaking at a press conference after the second ordinary session of Beac’s Monetary Policy Committee (CPM) for 2024, Bangui emphasized the need to restore Sonara quickly.
“Cameroon must restore Sonara very quickly,” he said. Since a fire destroyed the refinery in May 2019, Cameroon has been importing all its finished petroleum products, including gasoline, diesel, kerosene, and some domestic gas. This has weakened Cemac’s foreign exchange reserves, he explained. “Today, all countries in the sub-region import finished petroleum products. This weakens our external position,” Bangui warned.
Foreign exchange reserves are the countries’ currency holdings. Under monetary agreements with France, 50% of these reserves are typically repatriated to Beac, while the other 50% are held in an operational account with the French Treasury. This pooled resource allows Cemac states to collectively cover their import bills. A country can import goods even if its bill exceeds its own reserves by using the reserves of other member states with surplus currency holdings.
Beac projects that Cemac’s reserves will reach CFA7,285 billion by the end of 2024, covering 4.79 months of imports. Cameroon, the economic engine of Cemac, has been contributing 70-80% of these reserves. The massive importation of finished petroleum products since the Sonara fire has eroded these shared reserves. This prompted Bangui’s call for a rapid rehabilitation of Sonara to restart crude oil refining and reduce the need for importing finished petroleum products, thereby preserving foreign exchange reserves.
Rehabilitation work on Sonara, estimated at CFA250 billion, was initially scheduled to start in 2022, according to Prime Minister Joseph Dion Nguté. However, this timeline was not met. Speaking again to the deputies in November 2023, Nguté announced that Front End Engineering & Design (FEED) studies would be conducted in 2024 to launch the rehabilitation project.
Energy Minister Gaston Eloundou Essomba assured that two companies, American Chemex Global LLC and French Performance Plus Innovation, have been recruited to conduct these studies and provide project management assistance. “Following new instructions from the President, the responsibility for overseeing Sonara’s rehabilitation has been assigned to the company’s director general. An action plan has been developed and submitted to the IMF, and the engineering and project management firms have been selected,” Essomba detailed during the 2024 budget defense.
