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Rising Production Cost at SONARA Threatens Fuel Price Hike 

By Muto Mulema — Despite repeated guarantees from public authorities that a possible rise in fuel prices cannot be envisaged at the moment, production difficulties at the National Oil Refinery, SONARA, during the first days of January 2012 still give reason to remain skeptical.

With rehabilitation and extension works going on at SONARA at the moment, production activities have come under enormous financial strain, Cameroon Postline has gathered. Based on our findings, the cash difficulties are greatly compounded by an outstanding debt of about 300 billion FCFA owed the refinery by the Cameroon government which has been going every mile to keep fuel prices low in fear of possible social repercussions.

“We are sitting on a hot volcano. SONARA is asking cash payments and if it cannot get enough, production may slump and the worst may happen,” a reliable source at the ministry Industries and Mines told Cameroon Postline.

Independent sources have confirmed that more than ever before, the State has been watching petroleum activities very closely. Audits on subvention accounts are gaining pace while stakeholder meetings and negotiations in the petroleum sector have been increasing in number.

However, at the State agency in charge of the stabilization of petroleum prices, CSPH, officials still maintain that there is no cause for fear. They base their argument on a 15 December 2011 press release signed by their general manager Ibrahim Talba Malla announcing that “an increase in fuel prices is not yet on the agenda”, of government.

Speaking to a reporter this week a CSPH official gave away the uncertainty of the situation and the fears of the government on the matter: “I did not say there won’t be an increase in fuel prices in 2012. But at the moment, it is not an issue,” he said.

Fear of a fuel price hike in Cameroon was heightened in early December 2011 when a senior official at CSPH told journalists that it was “humanly impossible to maintain fuel prices at the current level”. He announced that government had pumped subventions worth about 700 billion FCFA between 2008 and 2011 to keep prices afloat and may not be ready to continue doing so.

The official hinted that government was more interested in investing in the road network and urban transportation. With strong criticisms and strike threats issued by road transport syndicates, the general manager of CSPH, Talba Malla made a more formal comment dismissing the claims.

Early this year, a removal of fuel subsidies in neighbouring Nigeria caused weeklong street protests that crippled economic activity including oil exportation – the mainstay of the Nigerian economy. It is feared that a similar move in Cameroon may lead to a more disastrous social degeneration with far-reaching political consequences.

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