Cameroon Rejects Operator’s Plan For Gas Price Hike to >$8/Mscf - Africa’s premier report on the oil, gas and energy landscape.

Cameroon Rejects Operator’s Plan For Gas Price Hike to >$8/Mscf

By Jackson Atoumba, in Yaunde

The proposal by Gaz du Cameroun’s (GDC) to increase prices paid for natural gas by its customers has faced continued stonewalling by the country’s authorities.

GDC holds a monopoly on the processing and supply of natural gas –used by industrial companies as a backup energy source amid repeated power outages in Cameroon.

The company, a wholly owned subsidiary of the British independent Victoria Oil and Gas, had threatened to cut supply to any of its clients, made up of some 30 industrial companies in Douala, Cameroon’s leading commercial city, that are opposed to its new pricing as of September 1, 2023, at 8 a.m.

Some of its customers are Guiness, the beer maker, Dangote, the cement manufacturer, Prometal, an engineering fabrication firm and OK Foods.

GDC currently charges over $6.75 per thousand standard cubic feet ($6.75/Mscf) of natural gas supplied from its processing plant. The increase will push the price above $8/Mscf.

The government has refused. Cameroon’s Minister of Trade Luc Magloire Mbarga Atangana, argues that a unilateral increase of natural gas prices is contrary to the texts of the agreement between CDC and the Cameroonian state.

“I was informed of your supply suspension notice, effective September 1, 2023, for industrial natural gas consumers should they fail to pay the supplementary invoices issued by you, raising your prices by 20%”, Mr. Atangana wrote in an August 29, 2023 letter to CDC, his third such correspondence on the subject in six months.  “In this respect, I have the honour of reminding you of my letters (…) of May 30 and June 14, 2023, inviting you to fully comply with enforceable texts and consequently asking you to postpone any unilateral and uncoordinated measures to increase prices.”

Luc Magloire Mbarga Atangana’s letter also indicated that he had referred the matter for President Paul Biya’s arbitration. “I would also like to point out that this matter has been referred for the decision of the high command and that nothing can be done outside this scope without deliberately violating the relevant texts and rules,”.

Mr. Atangana accuses GDC of non-compliance with enforceable regulations concerning industrial gas prices in the domestic market, invoking the provisions of Decree no. 2023/232 of May 4, 2023, laying the implementing guidelines of  Law no. 2019/008 of April 25, 2019, on the Petroleum Code. Both laws, taken together, subject an increase in the price of natural gas distributed in the domestic market to a prior approval process. That process requires economic operators wishing to increase the price of their goods to first submit the decision to the government along with all the documentation supporting their proposed decision.  GDC’s counter argument is that the company was not subject to the provisions of the 2019 Petroleum Code and its 2023 implementing decree, but is instead bound by the provisions of the investment agreement signed in 2009 with the Republic of Cameroon.

The Cameroonian government responds that the investment agreement between GDC and the Republic of Cameroon requires the company to negotiate any pricing decision with the government, through the National Hydrocarbons Corporation (SNH) and the Ministry of Mines, before implementing it in the domestic market.

 

 

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