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Cameroon Infrastructure Report Q3 2011
Business Monitor International, June 2011, Pages: 56
Business Monitor International's Cameroon Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Cameroon's infrastructure industry.
Although modest, BMI’s outlook for Cameroon’s construction sector is stronger than those in many advanced economies. Although the industry is hampered by a dearth of feasible projects on the ground, foreign and multilateral funding will help keep the sector within the 3% growth mark over 2011-2014, with the industry growing to reach a value of XAF316.07bn (US$650.1mn) in 2011.
Key developments in recent months include:
- The African Development Bank (AfDB), the International Finance Corporation (IFC), and the Netherlands Development Finance Company (FMO) will lend EUR66mn (US$92.9mn) to Cameroon's Dibamba Power Development Company to help it build an 86MW power plant in the country, it emerged in late May 2011. The support of these financial institutions is crucial, as Cameroon is in dire need of a reliable electricity supply.
- Although Cameroon's traditional economic partners have been European countries (especially France), economic interaction with China has increased rapidly over the past decade, with an increasing number of Chinese-financed infrastructure projects being developed in the country. China made the largest ever loan allocation to Cameroon, granting US$542mn for a hydro power project, in May 2011. The African country has struggled to meet electricity demand in recent years as it has had difficulties getting its flagship project – the Lom Pangar hydropower plant – off the ground. The Export-Import Bank of China (ChinaEximbank) is to issue the loan to pay for the construction of a 201MW hydropower plant on the Ntem River. The Memve'ele dam will be built over the next five years, although more detailed information is still to be released.
- Sundance Resources’ US$4.7bn Mbalam Iron Ore Project will result in spill-over investment in Cameroon’s infrastructure. The project includes construction of a rail corridor and bulk materials port. The iron ore mine is located in eastern Cameroon, and will link to a new port to be built in Kribi, on the coast, via a 510km rail line. The railway will have a 60km spur line from the mine in Mbarga to a processing plant across the border in the Democratic Republic of Congo.
- In May 2011, Victoria Oil & Gas obtained a 25-year exploitation licence for its Logobaba gas and gas condensate project in south western Cameroon. The company will now install and commission the required gas pipeline network, re-open wells, construct a processing plant and initiate related works. The licence, which offers a 10-year extension option, will enable the company to begin deliveries of gas to industrial customers by Q411. Perenco's bullish statements in mid-2011 suggest that progress is also being made on Kribi LNG, despite the fact that Cameroon has yet to begin meaningful gas production.
Any potential growth in government capital investment in the country’s construction sector will be weakened in the short-term, as spending continues to tilt away from public investment. The government has increased its focus on current expenditure as Cameroon expands the civil service, and tries to cap food and fuel prices. BMI expects the sector’s growth to hit 4.4% by 2015, when it will be worth XAF406.61bn (US$774.84mn).
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