• Cameroon seeks $141-$177M local bank facility to guarantee NHPC payments
• Move aims to cover Eneo’s arrears and prevent full drawdown of World Bank-backed SBLC
• Eneo’s mounting debt and cash shortfalls pose fiscal risks to government
  

Cameroon’s Ministry of Finance is negotiating with Société Générale Cameroon and several local banks to set up a new financial guarantee ensuring regular payments to Nachtigal Hydro Power Company (NHPC), operator of the Nachtigal hydroelectric plant. Documents reviewed by Business in Cameroon show the plan involves a revolving credit facility of between 80 billion and 100 billion CFA francs, or about $141 million to $177 million, arranged by Société Générale Capital Securities Central Africa as lead manager. Société Générale Cameroon is among the participating lenders, while others are finalizing their commitments. “The Finance Ministry recently signed the agreement with Société Générale Cameroun, but signatures from other local banks are still pending,” a source close to the matter said.

The 24-month facility aims to settle Eneo’s outstanding payments to NHPC under a 2018 power purchase agreement and to replenish a standby letter of credit (SBLC) issued by Société Générale on behalf of the Cameroonian government in favor of NHPC. That letter, worth €86 million and backed by a World Bank guarantee, was established to cover payment defaults.

The new talks complement the sovereign guarantee already provided by the state through Société Générale Paris. The original €86 million guarantee, equivalent to about 56 billion CFA francs, has now been more than 85 percent drawn down, leaving less than €10 million available. “The guarantee has not yet been exhausted, and it must not be, since it is counter-guaranteed by the World Bank,” said another source familiar with the situation.

Eneo, which operates Cameroon’s power distribution network, has been under pressure since the Nachtigal dam began commercial operations. With an installed capacity of 420 megawatts, NHPC invoices Eneo roughly 10 billion CFA francs each month, whether or not the electricity is consumed, in line with the contract signed with the state. However, delays in completing transmission lines from Nyom and the partial commissioning of the line to Yaoundé have limited the ability to absorb the full output.

Facing severe cash-flow constraints, Eneo has struggled to meet its contractual obligations since February. The company was required to provide a bank guarantee to mitigate non-payment risks, supplemented by a sovereign guarantee, but it failed to secure financing. As a result, NHPC activated the World Bank-backed guarantee held by Société Générale Paris. To date, Eneo’s payments reportedly cover less than half of its monthly invoices, according to information obtained by Business in Cameroon. The company has not publicly commented on its financial position.

To prevent a funding shortfall that could disrupt the project, the Finance Ministry is seeking a new guarantee facility with local banks to ensure NHPC continues to receive payments even if Eneo defaults. “Mindful of Cameroon’s credit rating and the state’s financial credibility, the ministry is working to maintain investor and donor confidence,” said an official involved in the discussions.

Eneo’s financial situation remains fragile. According to the Energy Compact Country Report from the Ministry of Water and Energy, the company’s total debt stood at 800 billion CFA francs at the end of 2024, including 500 billion owed to suppliers and 80 billion in receivables. The ministry lists Eneo among the state’s major fiscal risks. In internal documents, the company is described as “a factor likely to create a gap between budget forecasts and execution,” due to its deteriorating finances and high risk of insolvency.

Amina Malloum, Business in Cameroon