(Business in Cameroon) - In a release on September 22, 2014, the Managing Director of Société nationale de raffinage (Sonara), Ibrahim Talba Malla, announced that Cameroon’s only oil refinery is to set-up a new headquarters in Limbé, in the South-West region.
Although the investment’s amount has not been revealed, Sonara’s managing director’s announcement has sparked a lot of questions in economic circles, both in terms of opportunity and feasibility. By the admission of Cameroonian public authorities and Sonara heads themselves, the public company is almost in suspension of payments due to lack of earnings between 2008 and July 2014 due to Cameroon’s oil product subsidies.
Indeed, when the Cameroonian government decided to reduce the oil product subsidies by adjusting the price at the pump starting in August 2014, Sonara accumulated 300 billion FCFA in unpaid income yet to be settled by the State.
Mr. Tchiroma had revealed that the refinery has so far accrued 550 billion in outstanding payments to its providers. This does not take into account its loans with local banks that financed Sonara’s infrastructural expansion and modernisation project which led the IMF to fear, last May, a notable impact on the Cameroonian banking sector’s stability in light of the financial difficulties the company, currently struggling with productivity decline, has been facing.