When the Cameroon Senate approved updates to the country’s 1999 Petroleum Code in 2019, it positioned the nation for resiliency and long-term success.
The new upstream(exploration and production) legislation included a tax holiday for oil and condensate project development and seven more years for natural gas project development.
The legislation also allows production sharing contracts (PSCs) to be modified so companies can recoup exploration expenses.
The chamber commends Cameroon for these measures. In fact, the chamber recommended tax holidays in 2020, after Cameroon updated its code, to help African countries prevent oil and gas project cancellations in the COVID-19 era.
Tax holidays allow oil and gas companies to control revenue reductions, improve liquidity, and prevent job losses. Tax policies like these could play an important role in keeping African petroleum-producing countries competitive when demand for oil and gas begins to decrease.
The humanitarian, political crisis and violence in the English-speaking Anglophone region with vast oil and gas reserves has increased reputational risks for oil and gas exploration in Cameroon. A fact that has made foreign oil and gas companies nervous when it comes to taking advantage of the improved fiscal frameworks.
The government’s involvement in what is being perceived internationally as one of the worst refugee crisis and its inability to end the overall political impasse creates a more bearish view of the country’s resource potential.
The ongoing political uncertainty, Covid 19, regulatory uncertainty from BEAC and low oil prices have thrown a curveball on potential FID’s for many planned oil and gas production projects at a time when Cameroonian officials are seriously exploring options on how to increase oil and gas output, revenues for the state and revive an ailing economy.
Massive potential, great hope and super returns, if they get it right, as the saying goes Impossible n’est pas Camerounais.
Mr NJ Ayuk is the CEO of Centurion Law Group, a pan-African legal and advisory conglomerate with its headquarters in South Africa and offices in Equatorial Guinea, Ghana, Cameroon and Mauritius.
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