On November 19, 2025, the Cameroonian state completed what has been described as the renationalization of ENEO (Energy of Cameroon), agreeing to buy back the 51% stake previously held by British investment fund Actis. As a result of this transaction, the state now controls 95% of ENEO’s capital. ENEO remains the backbone of Cameroon’s electricity sector, holding a monopoly over distribution and operating generation assets made up of 44 power plants, with an energy mix combining hydropower, thermal generation, and solar.

This renationalization comes at a time when Cameroon’s electricity sector is facing a severe and multidimensional crisis. The core question is no longer ideological, but practical: what can, and what will, the Cameroonian state do to stabilize and rescue a sector that is essential to both quality of life and economic development?

By taking back ENEO, the state has carried out a far-reaching vertical integration, bringing under its control—through various public entities—power generation (ENEO), transmission (SONATREL), distribution (ENEO), regulation (ARSEL), water resource management (EDC), and rural electrification (AER). Rather than resolving existing weaknesses, this consolidation risks compounding them, as each of these entities has long-standing structural flaws, including the chronic governance issues that affect many state-owned enterprises.

Structural financial imbalance puts pressure on public finances

Beyond institutional integration, the most serious challenge is the sector’s deep and structural financial imbalance, which has become both a visible and, at times, hidden burden on public finances. While the state is spending CFA78 billion (about €119 million) to acquire Actis’s shares, the transaction also brings with it ENEO’s debt burden, which stood at CFA800 billion (about €1.22 billion) at the end of 2024. These liabilities are owed to a wide range of creditors, including suppliers, independent power producers, and banks.

The imbalance is clearly reflected in ENEO’s operating figures. According to Cameroon’s Ministry of Energy, the company generates monthly revenues of around CFA30 billion (€45.7 million), against financial commitments of nearly CFA50 billion (€76.2 million). This gap is largely explained by electricity tariffs that have been frozen by the regulator ARSEL since 2012, forcing the distributor to sell power below cost. In theory, the state is supposed to compensate for this shortfall. For 2025 alone, the compensation requirement is estimated at between CFA70 billion and CFA100 billion.

The situation is made more fragile by payment arrears from ENEO and the state to Nachtigal Hydro Power Company (NHPC), which undermine investor confidence in the sector. Even more worrying, the continued deterioration of sector finances has led to the near-full use of the World Bank-backed Letter of Credit linked to the Nachtigal project. By November 2025, more than €85 million (CFA56 billion) had already been drawn. Replenishing this guarantee has become an urgent priority for the government.

Against this backdrop of tight public finances and cash-flow pressures, how long can ARSEL resist raising electricity tariffs? And what would be the social and economic consequences of higher prices, at a time when supply remains unreliable in both quantity and quality? According to the latest economic dashboard published in November 2025 by GECAM, Cameroon’s main business association, 83.6% of business leaders identify power shortages and disruptions as the main weakness of the country’s business environment.

Investment planning gaps and grid bottlenecks

The issue of electricity supply is particularly striking given the commissioning, in March 2025, of the Nachtigal hydropower plant, which added 420 MW to installed capacity—an increase of roughly 30%. The project was expected to put a lasting end to load shedding and rationing. In terms of design and PPP structure, Nachtigal is widely seen as one of Africa’s most successful energy projects.

However, Cameroon’s structural realities have undermined these expectations. Years of weak investment planning have left the downstream segment—especially power transmission—unable to absorb the new capacity. The transmission network, managed by the state-owned utility SONATREL, suffers from chronic underinvestment and has become a critical bottleneck. As a result, the grid cannot carry all the electricity produced, particularly from NHPC.

Compounding the problem is the structure of Nachtigal’s power purchase agreement. The contract includes a “capacity payment” clause, similar in principle to a take-or-pay mechanism, under which NHPC is paid based on the plant’s available capacity rather than the actual energy dispatched. In contrast, an “energy payment” would remunerate only the electricity effectively delivered.

In practical terms, Nachtigal’s full 420 MW must be paid for, even when SONATREL’s dispatch needs fall to around 200 MW due to grid limitations. Yet capacity payment mechanisms assume a robust transmission and distribution network capable of absorbing peak output. While the clause was designed both to ensure continuous availability of capacity and to guarantee the project’s financial viability, it has become a major source of controversy.

Sector specialists note that without capacity payments, it would have been impossible to mobilize the CFA800 billion required to finance Nachtigal. But with the state now acting as the off-taker following ENEO’s takeover, what was meant to be a backstop guarantee has turned into a binding and recurring expenditure that is unsustainable in the long term without deep sector reform. Beyond honoring contractual commitments, the state will have to invest heavily to fix transmission and distribution weaknesses—at a time of acute budget constraints.

Risks for Kikot dam and Cameroon’s energy compact

Full compliance with the Nachtigal power purchase agreement is all the more critical because any default would have spillover effects on other major projects in the pipeline, notably the 500 MW Kikot hydropower dam. Kikot is structured along similar lines to Nachtigal, with many of the same players, including EDF, and the same financial partners such as the World Bank Group and the African Development Bank.

Beyond Kikot, a failure at Nachtigal would jeopardize Cameroon’s entire power sector strategy, as laid out in the National Energy Compact. This reform agenda aims to expand electricity access to about 8 million people by 2030 and mobilize $12.5 billion in financing, including $6.5 billion from the private sector. A breakdown in confidence could also make Cameroon ineligible for Mission 300, the World Bank and African Development Bank initiative to connect 300 million Africans to electricity by 2030.

Another major challenge lies in redefining the role of thermal power plants in the energy mix. In Cameroon, the cost of thermal power is roughly three times higher than hydropower. Yet facilities such as the 216 MW gas-fired plant in Kribi and the 88 MW heavy fuel oil plant in Douala-Dibamba were designed for baseload generation. In a hydro-dominated system, thermal plants should serve mainly as peak-time support. Globeleq, the British owner of both plants, is currently owed more than CFA137 billion by ENEO and the Cameroonian state.

Given these challenges—and others—the risk is real that Cameroon’s electricity sector could break down, dragging the wider economy with it. Electricity sits at the heart of the country’s development ambitions. With the state once again the central actor, the margin for error has narrowed sharply. Energy sovereignty, on its own, is not a sufficient objective.

Emmanuel Noubissie Ngankam

Economic Analyst

Former senior official at the World Bank

enoubissie7897@gmail.com