Energy in Cameroon
Major political events occurred in Cameroon in 2018, including the re-election of the country’s president, in power since 1982. Cameroon is the largest economy in the Central African Economic and Monetary Community (CEMAC), a region experiencing an economic crisis triggered by the steep fall in oil prices. The power sector is characterised by the gap in the demand and supply of power, resulting in frequent grid outages. Energy consumption is one of the lowest globally, at 342kg of oil equivalent per capita; electricity access has been assessed as 54% nationally (88% in urban and 17% in rural areas) [Ref.1]. However, the power sector must play a strategic role in the ambition of the government to make Cameroon an energy exporter by 2035. According to the energy leaders, the achievement of this ambition (which relies on heavy investments in hydropower) is tainted with much uncertainty. Uncertainty is on the one hand related to speculations over the exchange rates devaluation affecting the CEMAC and on the other hand linked to the risk of extreme droughts which could affect the hydropower capacity of the country. The potential capacity of large hydro facilities to enable modern and affordable energy access for all Cameroonians seems uncertain for energy leaders. In addition, energy leaders seem to be struggling to secure the investments required to extend the grid across the territory. Cameroon’s energy leaders’ actions priorities include freeing the energy sector from corruption, boosting economic growth and promoting energy efficiency.
Exchange rates represent a critical uncertainty regarding the development of the power sector of Cameroon due to its potential negative impact on energy projects which rely on imported equipment and services. In fact, debates and speculations over the devaluation of the local currency discourage external investment. The situation has been exacerbated over the past two years after the Economic Partnership Agreement (EPA), signed by Cameroon, came into effect in August 2016.
Hydro is the main source of electricity in Cameroon as the country has the second largest potential in sub-Saharan Africa, (estimated at 115,000 GWh/Year, currently harnessed at less than 5%. In 2018, the 420MW Nachtigal hydropower project reached financial close and groundworks and civil engineering are to start soon. Other hydro projects are still in gestation as well as in maintenance. Nevertheless, energy leaders are uncertain that the investments required for large hydro facilities and grid extensions necessary to deliver 100% energy access by 2035 will be achieved.
Extreme weather risks represent an uncertainty expressed by energy leaders in Cameroon due to the vulnerability of the hydro capacity to extreme droughts. In fact, the drastic drop of the flow rate of the Sanaga River (which concentrates 75% of Cameroon’s hydroelectric potential during the dry season severely affects the generating capacity of the two existing hydropower plants, with resulting power outages. Energy leaders in Cameroon are worried that in the future climate change could worsen the intensity and frequency of droughts in the region.
Corruption is perceived by Cameroonian’s energy leaders as a key challenge to be addressed and high in priority. In fact, from 2017 to 2018 Cameroon has been ranked 153 least corrupt (with 1 being the least corrupt) nation out of 180 by Transparency International [Ref. 5]. Corruption affects both private and public sectors and subsequently the energy sector which is jointly owned by the public and private sector. Although measures are undertaken by the government to eradicate corruption, it still represents a key barrier to overcome towards an effective development in all sectors, including energy.
Economic growth of Cameroon has long been steady averaging 5.8% from 2013 to 2015 before falling to 3.4% in 2017. However, it showed signs of increase in Q2 as it reached 3.9% while still facing considerable risks, including deteriorating security in its English-speaking regions. From the established relationship between energy consumption and economic growth, energy leaders (while recognising the strategic role to be played by energy in reaching the development goals) are expecting a stronger economic growth to create a more favourable environment for investments in energy projects.
Energy Efficiency is perceived by energy leaders as one of the most pressing challenge to be addressed. In December 2016, the World Bank invested $325 million to improve efficiency and reliability of the national electricity network, which is deeply affected by losses estimated at about 30% of total generation capacity. Also, campaigns have been undertaken by the electricity utility sector to grow awareness on good practices in terms of energy consumption and the improvement of the demand-side management. Therefore, priority is set on energy efficiency as a means to reduce the gap between demand and supply of power across the country.
This year’s Issues Monitor for Cameroon highlighted Talent as an action priority. The issue of talent scarcity is viewed as a hindrance and a cause of mismanagement [Ref.1]. Moreover, energy leaders are uncertain about energy affordability that is perceived as an additional deterrent to energy access in urban areas.
Cameroon’s energy landscape has shown an overall stability in the last three years, with some significant issues remaining priorities. Currently, the government has embarked upon multiple parallel efforts to develop new hydropower infrastructure, but the energy sector remains slowed down by corruption and economic stagnation. Other key aspects to watch in 2019 are the impacts of energy efficiency initiatives and the completion of new hydropower plants on the energy access rates. Exchange rates and extreme weather risks are key uncertainties darkening the long-term future of Cameroon’s power sector.