Presentation 8th German-African Energy Forum Elung Che CSPH Cameroon

Siège Social: Yaoundé, Rue 1025, avenue
Konrad Adenauer (1025) Warda -

BP/P.O.Box 501 Tel: (237) 22 50 30 00 /
22 50 30 10 Fax: (237) 22 50 30 02
BP/P.O.Box 501 Tel: (237) 22 50 30 00 /
22 50 30 10 Fax: (237) 22 50 30 02
Area
- Total 475,442 km2
- 183,569 sq. mi
- Water (%) 0.57
Climate
-Semiarid and Hot in the North
-Tropical along the Coast Line
- Hot and Humid in the South
Population
- July 2013: 22,534,532
Density
- 39.7/km2
-102,8/sq. mi
GDP (Nominal 2013 estimate)

- Total $27.88 billion
Per capita $1,268

BP/P.O.Box 501 Tel: (237) 22 50 30 00 /
22 50 30 10 Fax: (237) 22 50 30 02
Energy is one of the major drivers for any developing economy. In Cameroon the Oil and Gas sector offers
several opportunities in the downstream sector particularly in the marketing and distribution of products
derived from crude oil and natural gas. The downstream sector touches consumers through products such
as gasoline, petrol, kerosene, jet fuel, diesel oil, cooking gas etc, as well as hundreds of petrochemical
products.
In this presentation we shall be looking at the investment opportunities available in the distribution and
marketing of oil and gas products especially cooking gas, gasoline, petrol and kerosene which offer the
greatest opportunities in investment.
This presentation shall be in four parts broken down as follows :
Legal and regulatory system

Major actors and market shares;
The opportunities in the sector;
The challenges in the sector
Conclusion
Siège Social: Yaoundé, Rue 1025, avenue Konrad Adenauer (1025) Warda - BP/P.O.Box 501
Tel: (237) 22 50 30 00 / 22 50 30 10 Fax: (237) 22 50 30 02
OVERVIEW OF THE DOWSTREAM PETROLEUM SECTOR
• The main activities of the dowstream petroleum sector are:

• Refining of petroleum products,
• Storage,
• Transportation,
• Quality control,
• Distribution.
AT THE STRUCTURAL LEVEL

Before liberalization
• Existence of only one supplier of crude oil : National Hydrocarbons Corporation (SNH)
• One refining company : National Refining Company (SONARA);
• One storage company : Cameroonian Company of Oil Deposits (SCDP)
• One transporter in charge of supplying the refinery with crude oil and the oil deposits with
finished products: the Cameroon Shipping Lines (CAMSHIP),
• One company in charge of quality control : Hydrocarbons-Analysis and quality control (HYDRAC),
• Five large international oil firms in charge of distribution, grouped within a professional
organization called « Groupement Professionnel des Pétroles » (GPP).
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AT THE INSTITUTITIONAL LEVEL
• Refining was governed by a single treaty establishment, and the storage, by a

memorandum of understanding linking the private sector to the Government ;
• The imports system of petroleum products was subject to a system of prior
authorization;
• The system of petroleum products prices was subject to a certification procedure
and administrative fixing of profit margins;
• Access to the profession of distributor of petroleum products required obtaining
approval and an authorization to implement dispensing outlet (service stations);
• Transportation fairs were fixed by the government ;
• A transport equalization system of petroleum products prices already existed:
• Equalization of inter-products, aimed at supporting the prices of products of mass
consumption (kerosene) through the so-called luxury products (super and diesel);
• An inter-regional equalization, to harmonize the prices at the outlet of all oil
deposits.
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AFTER LIBERALIZATION
• Abolition of the SNH monopoly in terms of delivery of crude oil at the SONARA and elimination of
the subsidy associated to this delivery since (1 / 07/95) ;
• Elimination of the SONARA monopoly in the provision of petroleum products to the domestic
market, by the gradual liberalization of imports (1st / 07/98) ;
• Elimination of the SCDP monopoly on the storage of petroleum products;
• Liberalization of distribution margins (1st /07/99)
• Liberalization of access to the activities of the downstream petroleum sector (11/13/ 00).
AT THE FISCAL LEVEL

• Up to 5% customs duties are applied on the imported crude oil outside CEMAC by SONARA and
10% on imported refined products;
• A value added tax applicable on the prices of SONARA products or imported, plus customs duties ;
• A special tax applicable on prices at the pump (120 F CFA/L for the super, 75 F CFA/L transferred to
the Road Fund and 65 F CFA/L for gas oil which is completely transferred to the Road Fund) ;
• A value Added Tax applicable on all benefits and margins related to the distribution.
• A Corporate Income Tax (IS) at the general rate of 38.5 %.
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In addition, it should be noted that the downstream petroleum sector which includes
the refining, storage and distribution of petroleum products already knew the
support foreign investments.
The distribution channel was in majority owned by the multinationals firms such as:
Mobil, Texaco, Elf, Total, B.P, Shell grouped within the « Groupement Professionnel
des Pétroles » (GPP).
After the Monetary Institutions Council, and thanks to the liberalization of the
downstream petroleum sector, the SONARA which supply in crude at the SNH with
preferential rates has been forced to buy on the international market at the world
price in force. This situation has led the corporation to open its shareholding to
foreign stakeholders such as TOTAL S.A.
With the increase of the consumption and the opening of the Cameroonian market at
the level of 20 % in the imports of petroleum products, it is however necessary to
invest in storage facilities and in particular those of the LPG( liquefied Petroleum
Gas)g
Investment projects in this domain has held the attention of several foreign
companies and the Cameroonian Company of Oil Deposits (SCDP) is planning to
increase its storage capacity.
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Parts
Major actors and market

share
Opportunities
Challenges
Conclusion
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• Law No. 90/031 of 10th August 1990 regulting commercial activities in Cameroon
• Law No. 2005/0577/PM of 23rd Febuary 2005 regulating conditions of environmental studies in Cameroon
• Ordonance No. 94/004 of 16th Febuary 1994 on the taxation of petroleum products
• Order No. 016/MINMEE of 13th July 1995 regulating the terms and condition and control mechanisms of
petroleum products
• Decree No. 99/818/PM of 09th November 1999 regulating the terms and conditions of
• Decree No. 200/935 of 13th November 2000 regulating the terms and condition in the execution of activities in
the downstream petroleum sector
• Order No. 022/MINMEE of 28th September 2001 prescribing terms and conditions in the execution of activities in
the downstream petroleum sector
• Order No. 025/MINMEE-MINFI-MINDIC of 05th October 2001 fixing the caution fee covering contratual
agreements with investors in the downstream petroleum sector vis-à-vis the State
• Order No. 023/ MINMEE of 28th September 2001 stating the number, the geographical zones, the stock and the
management and control of the necessary storage of petroleum products
• Order No. 00293/2007/MINMEE of 19th October 2007 modifying and completing the tenets of Arrete No.
023/MINMEE of 28th September 2001 giving the number, the geographical zones, the stock and the management
and control of the necessary storage of petroleum products
• Decree No. 2007/1360/PM of 10th October 2007 modifying and completing the tenets of article 13 of Decree No.
2000/935/PM of 13th November 2000 stating the business conditions of the activities in the downstream
petroleum sector
• Order No. 24/PM/CAB of 13th Febuary 2008 defining the supply procedures of the domestic market of petroleum
products
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PART 1: MAJOR ACTORS AND MARKET SHARE(1/1)
We shall be looking at the two most important areas with opportunities of investing in the marketing and
distribution of oil and gas in Cameroon (cooking gas, gasoline, petrol and kerosene distribution).
In the cooking gas sector the major actors and market share as per statistics from the Ministry of Water
and Energy suggest that:
the Société Camerounaise de Transformation Métallique (SCTM), , controls close to 50% of the market.
Total and Camgaz follow with 18% each, and the Aza Afrigaz brand sits at 11%.
OILIBYA, MRS and Kosan Chrisplaint (Glocal Gaz) – have 6% each.
TRADEX the most recent partner in the market with its over 33 stations is fast eating up some portion of
the market from the traditional partners like SCTM and Total.
It should be noted that only about 60% of the cooking gas market in Cameroon is covered by these
companies.
In the distribution of gasoline, petrol and kerosene through filling stations, official figures suggest that the
major actors in this sector are Total, OILIBYA and MRS respectively.
With the liberalization of the country’s hydrocarbons sector new comers are rapidly getting into the
market like BOCOM, TRADEX, etc are doing extensive expansions to most parts of the country.
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PART 2: OPPORTUNITIES IN THE SECTOR (1/6): General aspects
With the recent increase in the Cameroonian population more families and homes will be
needing oil and gas consumer products for the daily activities;
The increase in the Cameroonian middle working class with above average revenue will
increase the consumption of cooking gas and other consumer oil and gas products in the very
near future;
Environmental and sustainability implications have highly reduced the utilization and
consumption of other heating and energy products like firewood and charcoal paving the way
for oil and gas;
Rural exodus is putting so much pressure on the consumption of oil and gas consumer
products in all major cities in Cameroon which has increase the potential market in these
areas;
Huge opportunity for joint venture as many Cameroonians and Cameroonian companies have
been created, focusing on distribution. Joint venture between Engen of South Africa and
Blessing Petroleum (a local Cameroon company) is an example.
.
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PART 2: OPPORTUNITIES IN THE SECTOR (2/6): General aspects
The socio-political stability of Cameroon and its strategic location in Central Africa
gives it a pivotal role for profitable investment in this sector;
It should be noted that only about 60% of the cooking gas market covered in
Cameroon, giving an additional 40% of market share not yet supplied with the
necessary products.
Open market for all; No insistence on local participation in the share capital
though it is encouraged.
Skilled human resources and huge industry know how as Cameroon has been an
oil & gas player for the past four decades
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PART 2: OPPORTUNITIES IN THE SECTOR (3/6): Legal, tax and regulatory issues
During the period of the concession, licence or authorization are subject to compliance with the
obligations binding them, notably, the foreign exchange regulations and the Tax Law, holders shall
enjoy the following benefits :
♦ the right to open in the Republic of Cameroon and abroad, accounts in local and foreign
currencies and to use them in carrying out transactions ;
♦ the right to freely keep abroad funds acquired or borrowed abroad and freely dispose of same,
♦ the right to transfer and freely keep abroad revenue related to gas operations, dividends and any
returns on invested capital as well as proceeds from the liquidation or disposal of their assets ;
♦ the right to pay directly abroad, non resident suppliers of goods and services required for the
carrying out of gas operations.
Expatriate personnel employed by the company and resident in the Republic of Cameroon, shall
enjoy free conversion and transfer to their countries of origin of all or part of their entitlements,
subject to prior payment of taxes and levies to which they are liable under the regulations in force.
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PART 2: OPPORTUNITIES IN THE SECTOR (4/6): Transportation, Storage, Control and Distribution of Petroleum Products
In Cameroon, the average consumption of petroleum products is on the rise. In 2010 consumption of
petroleum products within the national territory was at 1 108 403 m3 . In 2011 consumption was at 1 199
217 m3 . In 2012 it was 1 316 399 m3. In 2013 the consumption was at 1 477 584 m3 . This shows that the
pattern is consistent with the increase in consumption in 2011, 2012 and 2013. Hence an average increase
in consumption of 8%, 10% and 12% for the years 2011, 2012 and 2013 as indicated in the table below.
Domestic
Premium Diesel Total
Kerosene
2010 452946 111 578 543 879 1 108 403
2011 479 130 117 139 602 948 1 199 217
2012 535 211 117 175 664 049 1 316 435
2013 594 628 113 170 769 786 1 477 584
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PART 2: OPPORTUNITIES IN THE SECTOR (5/6): Transportation, Storage, Control and Distribution of Petroleum
Products
The management of petroleum products involves transportation, storage, control and distribution.
Transportation
From SONARA in Limbe petroleum products are transported to Douala by ship. From Douala to
Yaounde, Belabo and Ngoundere, these products are transported via rail. From Bafoussam to Garoua, the
petroleum products are transported by road. The opportunities that exist in terms of transportation are as
follows:
♦ presently the maximum capacity of our rail wagons is at 50 percent creating an opportunity for similar
wagons in the market;
♦ another long term opportunity in Cameroon is the transportation of petroleum products through
pipelines. These pipelines could run from Limbe to Douala, from Douala to Yaounde passing through Kribi,
and from Douala to Bafoussam;
Storage
The insufficiency of petroleum storage capacity (fuel and liquefied petroleum gas) due to the
continuous increase in consumption of these products across the national territory (10% annually in the last
four years) creates thus the need to increase our storage capacities. Equally large infrastructural projects
launched by the Cameroonian government in recent years has created a surplus in energy demand. The
current capacity in fuel storage is 221 663 m3 of which 11000 m3 is meant for the emergency reserves, giving
210 000 m3 available for distribution compared to an annual consumption of about 1 316 000 m3 . This
creates the need to at least double this storage capacity in the near future.
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PART 2: OPPORTUNITIES IN THE SECTOR (5/6): Transportation, Storage, Control and Distribution
of Petroleum Products
Control
At the level of test controls for our petroleum products, there exists one operational
company which also is in charge of the control of the upstream sector. This is also another
opportunity for investments in this area.
Distribution
Presently there exists about 450 fueling stations through out Cameroon. However
more than 50% of sub-divisions in the country are not covered in terms of fuel sales. In the
event of building additional fueling stations in remote areas, the Hydrocarbons Prices
Stabilization Fund has a partnership investment policy in place. This then is a clear
opportunity for investors.
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PART 2: OPPORTUNITIES IN THE SECTOR (6/6): DISTRIBUTION OF GAZ
Activities related to the transportation, distribution and sale of oil & gas shall enjoy
the following benefits:
During the installation phase which may not exceed 5 (five) years with effect from
the date of notification, publication of award documents and signing of contracts
as the case may be :
♦ exemption from registration duties on instruments of capitalization or capital

increase;
♦ exemption from registration duties on leases exclusively for professional
purposes and forming an integral part of the investment program;
♦ exemption from transfer charges on acquisition of buildings, land and structures
indispensable for the execution of the investment program;
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♦ exemption form registration duties on equipment procurement contracts and
constructing of buildings and facilities required for the execution of the
investment;
♦ exemption from the special registration tax on insurance contracts of the
company;
♦ exemption from registration duties on concession contracts.
During the first ten years of operation, the company shall be entitled to deduction
of depreciation normally entered for the first three years of operation under
taxable revenue for the following five years.
During the same period, persons engaged in transportation, distribution, storage

and processing of gas shall be exempted from duties, taxes and customs duties on
the importation of capital goods intended for use in the activities cited above.
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• Section 60 of the Gas Code defines the rights and fees that are subjected to the actors of this
sector.
• Transportation or Distribution Concession:
• - Attribution: 5, 000,000 XAF;
• - Renewal: 7,500, 000 XAF;
• - Transfer: 10, 000,000 XAF.
• Furthermore, every operator in the downstream gas sector is subject to the payment of a fee
of which is and payable quarterly in arrears. Namely: For the Distribution: 5 % of annual
turnover;
Consumption of liquefied petroleum gas
• In 2010 consumption of LPG across the national territory was 60 419 MT(metric tons).
In 2011 the consumption was 65 883 MT hence an increase of 5% from the preceding year.
In 2012 the consumption was 70 543 MT and in 2013 this increase in consumption was
consistent by 9% . The table below is illustrative:
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Siège Social: Yaoundé, Rue 1025, avenue Konrad Adenauer (1025) Warda - BP/P.O.Box
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• From the foregoing, it is evedent that there is a huge deficit in the storage capacity
of LPG which is only at 2365 MT for the entire country. The same could be said for
the filling plants across the country. This clearly then presents another opportunity
for investments.
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DISTRIBUTION OF OIL
• Current taxes here are the Special Tax on Petroleum Products (STPP), the Value Added Tax (VAT). However, VAT is not
applied at such, but as a cost element in the structure of an administered price.
• In addition, the management of service stations with regard to payments on purchases, withholding on rents and
business license underline the particularity of this sectors.
• Special Tax on oil products : It is caused by the oil companies, distributor of taxable products. Specifically directed on
the sale of gasoline and diesel super. Its rates are in accordance with the provisions of Section 231 of the General Tax
Code: Gasoline-super : 120 XAF per litre AND Fuel: 65 XAF per litre.
• The generating factor of Special Tax on oil products: The delivery of taxable goods by the National Refinery Company
(SONARA); The introduction of taxable products on the territory as defined by the CEMAC Custom Code in respect of
imports ; The first use of petroleum products when it comes to deliveries to oneself.
• However, Section 233 of the General Tax Code notes that SONARA is the only organization authorized to retain the
STPP at source during the delivery of taxable goods. With regards to imported products, the STPP is paid directly by the
importer.
• VAT is applicable on the distribution of taxable goods. It should be noted that products like super and diesel cannot be
considered for VAT as enacted by Ordinance n°94/002 concerning taxation on oil products, the sale is only encumbered
by a specific rate, not an ad valorem tax as the normal or universal exist and function in the general tax law.
• However, only the VAT appearing separately on suppliers invoices is deductible by the client regardless of other rules
classical deductibility of VAT.
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PART 3: CHALLENGES IN THE SECTOR (1/1)
The volatility of the price of crude oil;
The increase of contrabands products from the neighbouring Nigerian market;
Sometimes there are delays regarding the issuance and delivery of permits and licenses;
Infrastructure problems impacting on distribution
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PART 4: CONCLUSION and The Way Forward
- The economy of Cameroon is under going rapid transformation in all sectors both socio-economic
and political wise.
- This developing economy which plays a very strategic and pivotal role in the Central African Region
has witnessed an important increase in its middle class, investment incentives,
- There has been considerable reduction in administrative business creation process, the
liberalization of its Oil and Gas sector
- Just under 60% of its consumer oil and gas products market is covered, and its recent 2035
development plans (land of opportunities) offers huge investment opportunities in the Oil and Gas
distribution sector.
- Huge number of new entrants and huge number of applications for distribution permits and
licenses are evidence of trust in the stable political and economic climate existing in Cameroon;
- Cameroon has embarked on many infrastructure development programs as evidence with in the
signing of co-operative agreements with multilateral institutions for the tarring of roads and
construction of bridges (Trans-African highway from Bamenda to Aba, in Nigeria). This will facilitate
distribution of oil & gas products.
- Predictable and stable legal, tax and regulatory environment
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Siège Social: Yaoundé, Rue 1025, avenue

Konrad Adenauer (1025) Warda -

GDP (Nominal 2013 estimate)

Siège Social: Yaoundé, Rue 1025, avenue

This presentation shall be in four parts broken down as follows :

Legal and regulatory system

• The main activities of the dowstream petroleum sector are:

AT THE STRUCTURAL LEVEL

• Refining was governed by a single treaty establishment, and the storage, by a

AT THE FISCAL LEVEL

Major actors and market

2010 452946 111 578 543 879 1 108 403

2011 479 130 117 139 602 948 1 199 217

2012 535 211 117 175 664 049 1 316 435

2013 594 628 113 170 769 786 1 477 584

♦ exemption from registration duties on instruments of capitalization or capital

During the same period, persons engaged in transportation, distribution, storage

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