SONARA Meltdown: No longer at ease!!!
It is almost one week since Cameroon’s lone oil refinery went up in smoke and the scale of the destruction is now obvious to everybody. SONARA will be out of business for at least three years and the government will have to come up with a huge chunk of money if it must have its largest ATM up and running again.
Rebuilding SONARA will require more than USD 20 billion and the government does not have that money in its coffers right now. SONARA has an insurance policy, but that will not kick in until cost adjusters and other agents complete their investigations.
This is indeed bad news for the cash-strapped and corrupt government that has been treating SONARA as its piggy bank, with government officials always sending helicopters to pick up raw cash from the oil refinery when a financial squeeze is staring the government in the face.
This has been the government’s modus operandi for decades. But this is gradually coming to an end, as state corporations keep on sliding into financial challenges. The Southern Cameroons crisis has robbed the Yaounde government of its vital sources of revenue.
CDC and PAMOL have gone under and it will take billions of dollars to set them back on track. Preliminary meetings with multilateral donors like the World Bank and the African Development Bank Group have not yielded much as state-owned corporations in the English-speaking regions of the country will need billions for them to get back into operation and they are really not good businesses for investors, at least for now.
It should be mentioned that a few months ago, the Board of Directors of the African Development Bank Group had approved a loan in favor of the Yaounde government for the construction of the ring road in the Northwest region. The World Bank had also approved its own share of the money, but both institutions had to put every on hold as the military situation in the region spiralled out of control.
The government’s military violence and its scorch earth policy in the two English-speaking regions of the country are gradually coming back to bite it. Its penchant for violence has robbed the country of vital resources that could help give the Central African nation’s development efforts a shot in the arm.
Cameroon is teetering on the brink of a human rights catastrophe in a cultural and linguistic conflict that has already killed more than 3,000 people. A government campaign against the country’s English-speaking minority has devolved into an armed conflict between security forces and over 10 armed secessionist groups. This situation might only get worse if urgent actions are not taken by the international community.
The Southern Cameroons crisis that started a protest by teachers and lawyers has been allowed to tailspin into chaos and this is really sucking energy and oxygen out of the country’s economy.
The government’s ability to attract investors to the country has been diminished by the senseless killings and human rights violations taking place in the country. Rebuilding SONARA will be an uphill climb, as investors have very low appetite for Cameroon’s debt.
The burden of rebuilding the country’s lone refinery has been placed on the fragile and aging shoulders of the country’s Prime Minister, Dion Ngute, who is currently suffering from insomnia. He thought his only challenge was the Southern Cameroons crisis, but the sticky situation born of the explosion in the country’s lone oil refinery is robbing Mr. Ngute of his sleep. It is also dumping a lot of age on him.
Ever since the fire gutted the refinery, Prime Minister Ngute, has been working the phones and holding countless meetings. Raising USD 20 billion has become a nightmare to Mr. Ngute who understands that the government he leads lacks credibility and confidence of bilateral and multilateral donors.
Very few people will actually invest in an unstable environment. The Yaounde government is very much aware of that and this explains why it has been shouting since last week that the explosion that reduced SONARA to rubble was a case of force majeure and not sabotage as claimed by separatists who have been hellbent on bringing the facility to its knees.
If the government admits that rebels are to blame for SONARA’s meltdown, then it would lose the race for resources to rebuild the bedeviled refinery that is still threatening to throw up more fire.
On Monday, huge fires were reported where the refinery’s reservoirs are located. It took firefighters and officials of the facility three hours to figure out what was happening. SONARA seems to have been jinxed and its woes will not be over anytime soon.
The initial fire that occurred last Friday had gutted the atmospheric distillation unit which is a key component of the facility. Indeed, that is where the oil refining process starts and engineers working for the refinery have indicated that it will take a very long time to rebuild the facility which has been delivering “golden eggs” to the corrupt and irresponsible Yaounde government.
Several meetings have been going on at the Presidency, but it is the panic at the Prime Minister’s Office that is attracting attention. Dion Ngute is losing sleep. The SONARA meltdown is putting his leadership qualities through their paces.
Prime Minister Ngute has to address so many issues, including the thorny Southern Cameroons crisis that has given the government a very bad name. But for now, he seems to be focused on SONARA. The government is out of cash and it needs other means to replenish its resources.
It is based on this that the Prime Minister is looking at the possibility of sending a high-level delegation to Abidjan to have discussions with the African Development Bank, the continent’s premier development finance institution that is capable of granting Cameroon an emergency loan of about USD 1 billion through its soft arm window.
The continent’s surest conduit for the channeling of investment finance has the experience of granting Heavily Indebted Poor Countries Under Stress (HIPCUS) like Cameroon low interest loans with little or no conditionalities. That is why the Yaounde government is seeing the African Development Bank (AfDB) as the institution that will grant it a bailout.
The African Development Group will next week hold its Annual Meetings in Malabo where it will be seeking a capital increase and an African Development Fund replenishment. If this is achieved, Cameroon will surely be one of the first countries to benefit from the replenishment.
That is why Prime Minister Ngute will also dispatch a huge delegation headed by the country’s Minister of Plan and Regional Development who doubles as the African Development Bank Group’s Governor to Malabo to have talks with AfDB officials. The minister will be meeting with the AfDB President who is open to lending Cameroon a helping hand.
There are also plans to send another delegation to Washington D.C. to have discussions with World Bank authorities. The discussions will focus on loans and grants that will enable the beleaguered government to rebuild the collapsed refinery.
But the discussions in Washington will be very tough as America might influence the World Bank’s decision. World Bank loans and grants to Cameroon might come with conditionaities that might border on the cessation of hostilities in the two English-speaking regions of the country.
Currently, the government has been discussing with the French government through unofficial channels. The French are willing to provide some financial infusion as they have been the primary beneficiaries of Cameroon’s oil. They are however concerned about the hostilities in the country and the current political climate is worrisome to them.
The jailing of Cameroon’s leading opposition leader, Professor Maurice Kamto, the presumed winner of last year’s presidential election, has attracted condemnation from rights groups across the world.
France is concerned about its own image and it is gradually distancing itself from the Biya regime that has become a lightning for controversy, especially as the majority of EU countries are insisting that the Yaounde government must hold an inclusive dialogue with Southern Cameroons. They are also calling for the release of Professor Kamto who is considered by the EU as a prisoner of conscience.
The government of Cameroon is no longer at ease. It has a lot on its plate and with its resources dwindling, it is clear that it might soon be down on its luck. This is more disturbing as its former allies are all jumping ship. EU countries have become very vocal about the government’s authoritarian nature.
America and Canada are breathing down the government’s neck and this is rattling the fragile government which needs more friends at this time. The end seems to be near and the rantings from Yaounde are no longer cutting ice with anybody.
The Yaounde government still has a choice. It must stop conducting itself as a rogue state. It should embrace the idea of an inclusive dialogue, release all political prisoners, including all Southern Cameroonians arrested within the framework of the armed conflict that has left thousands of Cameroonians dead, and grant general amnesty to all Cameroonians living abroad as a means of reducing the pressured that is gradually destroying it.
If it continues to conduct itself as it has done over the last three years, it must be ready to face the worst and even donors and investors will not come to its aide when the chips go down. The ball is in its court!
By Soter Tarh Agbaw-Ebai at the Global Headquarters in the United Kingdom and Kingsley Betek in Malabo for the African Development Bank Group’s Annual Meetings.