SONARA is at the verge of collapse - Issa Tchiroma

The Minister of Communication, Issa Tchiroma Bakary, has revealed that SONARA’s situation is at the verge of reaching a serious critical point. “SONARA, through which the State intervenes to subsidize hydrocarbon prices at filling stations, is today threatened in its survival, by the pressure exercised on its economic and financial balance through the weight of its intervention in the process of implementing the subsidy.

Its treasury no longer permits it to obtain credit lines, which are necessary to purchase sufficient crude oil to satisfy internal market demand, to the extent that SONARA is obliged to drop its production capacity from 340 cubic meters per hour to 200 cubic meters per hour, to avoid a total stop of its production units”, he revealed.

Tchiroma said for the 2014 financial year, FCFA 220 billion have been estimated to fill SONARA benefit gap as a result of the subsidized hydrocarbons prices at filling stations. “As it is today, while we are just mid-way to the financial year, FCFA 100 billion have already been spent, representing more than the forecasts and the projections for the end of the year are estimated to reach FCFA 450 billion, instead of the initially estimated FCFA 220 billion,” he said. He added that regarding the payments the State has to make to SONARA within the framework of this subsidy policy, they are estimated at around FCFA 300 billion, whereas the total SONARA unpaid bills vis-à-vis its partners and other suppliers, amount to FCFA 550 billion.

“It is against this backdrop of affairs, that the Government has decided to increase fuel prices in order to avoid the weighing down of the system as well as complying with national oil markets throughout the world”.Tchiroma made this remark during a press conference in relation to the recent increase in hydrocarbon prices by the government on July 1.

According to the decree signed on June 30 by the Secretary General at the Prime Minister’s Office, Louis Paul Motaze intended to go operational on July 1; A litre of super, steps up from FCFA 569 to FCFA 650, indicating an increase of FCFA 81. A litre of gas oil moves from FCFA 520 to FCFA 600, indicating an increase of FCFA 80.

Regarding domestic gas, the 12 and half kg bottle increases from FCFA 6 000 to FCFA 6 500, indicating an increase of FCFA 500. The price of the litre of kerosene, used by most underprivileged populations, remains unchanged at FCFA 350.

Notwithstanding, the real prices of hydrocarbons at filling stations and domestic gas, are as follows: Fuel at FCFA 825 per litre with a difference of FCFA 175, Gasoil, FCFA 770 per litre, with a difference of FCFA 170, Kerosene, FCFA 705 per litre, with a difference of FCFA 355 and 12 half kg bottle of domestic gas, FCFA 9230, with a difference of FCFA 2730.

“This statistics clearly indicates that the State has not therefore abandoned consumers, since the subsidy to oil product prices is still there. This increase simply aims at bringing back the said subsidy to affordable levels by the State finances. In essence, increase of hydrocarbon prices does not put an end to the government subsidy principle,” Tchiroma explained.

According to Tchiroma, the subsidy mechanism, from 2008 to 2013, cost the State the sum of FCFA 1 200 billion. “Within the first six months of this year, subsidy paid or due by the State in this respect, amounts to FCFA 157 billion, with a cumulated amount, from 2008 to date, amounting to FCFA 1 357 billion. This represent 36% of the 2014 State budget, which the government should have used to finance social, educational and infrastructural projects, necessary to improve the well-being of populations and to increase the country’s growth rate, which is a sensitive prerequisite for the realization of the emergence objectives of our country by 2035,” he said.

Issa Tchiroma again mentioned that the cumulated amount of the Government subsidy, FCFA 1 200 billion from 2008 to 2013, represents 120% of the 2014 public investment budget, five times the budget of the Ministry of Public Works, four times the budget of the Ministries of Basic Education, Secondary Education and Higher Education. “This amount would have also permitted the construction of four hydroelectric dams, like Lom Pangar, six referral hospitals, or more so the construction of 2400 km of tarred roads,” he added.

“The average of these prices in Cameroon still remains far under the average applied in countries with the same level of development with Cameroon,” he said. To accompany socio-professional strata, likely to be the most affected by this increase of prices, The Head of State, President Paul Biya, on his part, in order to accompany socio-professional strata, has decided that the following accompanying measures will be taken.

First, a litre of kerosene will be maintained at FCFA 350. The reduction to 50% of the amount of the withholding tax applicable to populations with low income, a 50% reduction of the parking tax, a 50% reduction of the axle tax, the increase of civil servants salaries, and kick-start negotiations to revalorize the guaranteed minimum wage.

Regarding the increase of civil servants salaries, the Minister of Finances is already proceeding with studies and simulations, to forward to higher authorities.

The guaranteed minimum wage would be submitted, in the days ahead, to the scrutiny of the National Labour Consultative Commission, competent in that issue. The Minister of Labour and Social Security has, in this effect, addressed invitations to the members of the said Commission.

Issa Tchiroma used this press conference as an arena to call on the Cameroon population to welcome these price increases with responsibility, understanding and civic-mindedness, not to give in to any guided manipulation manoeuvre, whose sole goal would be to jeopardize peace and stability in our country.

Minister of Trade Reacts The Minister of Trade, Luc Magloire Atangana, in a meeting on June 1, called on traders to avoid increasing the prices of food items. In this light, he has sent out controllers to the field to make sure that prizes are being increased.

Reactions From Yaoundé City Dwellers. Some taxi drivers in Yaoundé were griped by surprise when they stopped over at filling station to buy fuel. Some of them stood there in astonishment and anger but had no choice but to add the required amount, in order to buy the fuel. “I was really shocked this morning when I went buy fuel and start work. The government has really overdone it.

It is really going to be difficult for us now because our profit for the day will reduce. Since government has decided to increase the prices of fuel, I will also make sure that i step up my taxi fare so that I can be able to make earns meat. I will no longer collect FCFA100 from any passenger even if that passenger is going a short distance, a taxi driver, Romauld Mbappa complained.

Those who use cooking gas are not left out. Susan Eyong says the FCFA 500 is too much for her as a student. She says she will not be able to continue buying domestic gas. So she will just look for a charcoal pot and buy or better still, use a three stone fireside to cope with the situation.

Some private sector workers are not happy with the increase in fuel prices. “I am working with a private company and I own a car and my household uses only domestic gas to cook. I know that my boss cannot just increase my salary now, because there have been an increase in the prices of fuel and cooking gas. I am calling on the government to look into the situation of those in the private sector too”, Thierry Mokom lamented.