U.S. OPPORTUNITIES IN CAMEROON'S AMBITIOUS POWER

UNCLAS SECTION 01 OF 02 YAOUNDE 001847 SIPDIS SIPDIS STATE FOR USTR STATE PASS USTDA FOR PIERCE DAVIS DEPARTMENT OF ENERGY FOR GEORGE PERSON LONDON AND PARIS FOR AFRICA ACTION OFFICERS E.O. 12958: N/A TAGS: ENRG EPET EINV ETRD ECON PGOV PINR CM SUBJECT: U.S. OPPORTUNITIES IN CAMEROON'S AMBITIOUS POWER AND ENERGY PLAN ¶1. (U) Summary. Cameroon is "thirsty" for new investments in the oil, gas, and power sectors, and eager to establish partnerships with American companies and relevant USG agencies, according to Dudley Achu Sama, the seniormost technical advisor at the Ministry of Water and Energy (French acronym MINEE). In a meeting with Emboffs on December 14, Achu Sama said MINEE is seeking qualified firms to act as the sole Transmission Systems Operator (TSO) for Cameroon's power grid as well as investors for new oil and gas production, refining and related infrastructure. The Government of Cameroon (GRC) on November 30 created a new agency, the Electricity Development Corporation (EDC) to manage GRC assets and attract new investment to the sector. MINEE Minister Sindeu plans a two-week trip to Washington in January/February 2007 to meet with USG agencies (USTDA, Energy) and potential American private sector partners. End summary. -------------- -------------- Opportunity for a New Transmissions Systems Operator (TSO) -------------- -------------- ¶2. (U) A central component of Cameroon's power sector strategy is the selection of a new entity to act as the country's sole Transmissions Systems Operator (TSO),the middleman between power generators and power distributors. American firm AES Sonel has been acting as the national TSO under a five-year license (expired mid-2006) granted as part of the company's 2001 deal with the Government of Cameroon (which also gave AES Sonel exclusive generation privileges for five years and exclusive distribution rights until 2021 in areas where AES Sonel was active as of 2001). After determining the value of its extant transmissions infrastructure (set to begin January 2007),the GRC will identify which international firms would be capable of operating as TSO and invite them to participate in a tender process. Achu Sama was reluctant to estimate the value of the TSO deal, but surmised that the necessary telecommunications component alone would be more than USD 50 million and will require the backing of a major investment bank. According to Achu Sama, the most eligible candidates are all American, Canadian or British firms. 
 -------------- -------------- New Player: The Electricity Development Corporation (EDC) -------------- -------------- ¶3. (U) On November 29 President Biya created the Electricity Development Corporation "EDC" to manage public energy sector assets, carry out new public sector energy projects, and promote public and private investments in the energy sector, all in order to meet Biya's stated goal of 100 percent electrical coverage of Cameroon by 2020. According to Achu Sama, the EDC will be the GRC's asset-holding entity and as such will retain equity in the TSO and other energy-related enterprises. Achu Sama expressed hope that Biya will appoint the EDC leadership within the next few months. Unusually, the EDC will take operational control, for 2-3 years, of some large projects still in development until proper project management entities can be established. This would include the Lom Pangar Dam project in eastern Cameroon's Sanaga River Basin, a proposed hydroelectric dam (estimated capacity about 56 MW) that has attracted opposition from environmental groups that claim the project will harm the environment and disproportionately benefit the national aluminum smelting company ALUCAM (Cameroon's largest consumer of electricity). -------------- Other Projects on the Horizon -------------- ¶4. (U) Describing Cameroon as "thirsty" for new investments in the energy and gas sectors, Achu Sama listed a number of planned or hoped-for projects, some of which may provide YAOUNDE 00001847 002 OF 002 opportunities for official or private American partnerships: -- construction of new refinery capacity with a focus on exporting refined petroleum products; -- expansion of SONARA, the parastatal oil refinery in Limbe, from 2 to 5 million barrels per year and a complete technological overhaul of the existing facility (to handle more modern fuel products); -- new investments in the Bakassi Peninsula for oil and gas exploration, including offshore gas platforms, and for power generation to meet Nigeria's growing demand; -- construction of a bitumen plant in conjunction with refinery operations, to supply the expected surge in road construction; and -- expansion and diversification of the national capacity for storage of oil products beyond the current limit of 60,000 tons annually that is geographically concentrated in Douala. -------------- Coming to Washington -------------- ¶5. (U) Minister Sindeu plans to visit Washington for two weeks in January/February 2007. In addition to seeking investors in the projects listed above, Sindeu will seek United States public and private training to improve MINEE's capacity for formulating energy policy and planning. Achu Sama specifically mentioned MINEE's desire to learn from and emulate U.S. Department of Energy policies and practices and to benefit from USAID programs relating to energy (power pooling, renewable energy, rural electrification). Achu Sama said the GRC will request meetings with the USTDA, American company Foster Wheeler, NRECA (a rural electrification agency),the World Bank, and any interested power utilities. -------------- -------------- Comment: Cameroon's Energy Sector Offers Win-Win Opportunities -------------- -------------- ¶6. (U) In Cameroon's vexing business climate, the energy and power sectors stand out for their relative professionalism and functionality. Flush with cash from debt relief and eager to capitalize on its energy and power potential, Cameroon has set an ambitious agenda and extended a warm welcome to American public and private involvement. Echoing sentiments we have heard in other settings, Achu Sama said Cameroon would prefer to have American (and Canadian and British) partners to diversify its international partners with a greater orientation towards Anglophone partners. Minister Sindeu's early 2007 visit to Washington will provide an excellent opportunity to build closer relationships between Cameroon and private and public American energy interests. End comment. MARQUARDT