SONARA needs gov't intervention to survive

The lone petroleum refinery in Cameroon, SONARA that was established in 1981 was made to handle solely light crude. This was because the country’s petroleum production at the time was relatively small thus produced essentially light crude.

With this situation therefore, SONARA has had to import the light crude which it refines and sells in the country. Nigeria, Gabon and Angola are the main suppliers of this light crude. Also, the cooking gas that we use in our homes is also totally imported from the international market, with the some uncertainties with such importation.

Meanwhile, SONARA forecasted the situation and consequently embarked on a project of “extension and modernization” with the objective of eventually handling heavy crude in the future. This extension project consisted of technologically adapting the existing equipment of the refinery and constructing new ones that would not only refine heavy crude but do so at a stable rate to meet the ever increasing home demand for petroleum products.

According to official sources, the first phase of SONARA’s extension project was expected to be complete by September 2014. It was estimated to cost FCFA 220 billion. The 2nd phase was projected to begin in 2015 and estimated to cost FCFA 350 billion. This gives a total of FCFA 570 billion for the entire extension project.

Difficulties in financing the extension project- It should however be mentioned that because of the heavy burden on the state budget due to the recent fuel subsidy, it has became increasingly difficult for the state to honor its engagements with SONARA.

This was because over the years, the annual allocations for subvention of petroleum consumption in the state budget have always not been enough and government has always had to manoeuver the budget to be able to subsidize home consumption of fuel.

In 2014 for instance, 250 billion was allocated from state budget as subsidy to petroleum. But as at June 2014, government had already spent about 350 billion. It is estimated that at least 450 billion would be spent by the end of the year. This adds an extra, non-budgeted amount of FCFA 200 billion to the actual budget.

Understandably, it has not been easy for government to spend such huge sums to subsidize fuel consumption. On many occasions, government has had to sacrifice some important investment projects just to be able to permit Cameroonians to continue buying fuel at affordable prices.

But this has caused its own share of negative consequences on the execution of the state budget. It has also not helped the country’s economy in any way. If anything, it is rather helping to kill the economy.

For several years , the government has not been able to pay SONARA's subventions on time. Sometimes, the money is not sent at all. Presently, the government’s accrued debts owed to SONARA adds to about FCFA 300 billion. This leads to SONARA also owing her partners and suppliers about FCFA 550 billion.

This only puts SONARA in a precarious and critical situation, and calls for urgent intervention, to prevent the company from going into liquidation.

Left with hardly any better alternative, the government has to down-size its subsidy on fuel, if only it wants to save SONARA from collapsing.

The extra money that would be generated from the consequent upward readjustment of fuel prices would be diverted to other socio-economic investments that would impact the lives of the poor. Part of the money would also be used to clear SONARA’s debt obligations.

Cameroonians should understand that this sacrifice by gov't is what has keep fuel prices stable since 2008. This might just be the time for Cameroonians to also show a high sense of patriotism by supporting the government to come out of its difficulties. “We should not only ask what our country has done for us, but what we have done for your country.”

However, with more research and exploration over the years, Cameroon has witnessed appreciable increase in petroleum production, with the bulk of it being heavy crude, which unfortunately Sonara cannot handle.