Cameroon to lose billions of FCFA in transit fees for Nigerien oil due to Boko Haram

On November 1, 2023, Niger’s transitional Prime Minister, Ali Mahaman Lamine Zeine, presided over the inauguration ceremony for a 2,000 km pipeline linking Niger’s Agadem oil fields (over 1,500 km from Niamey) to the port of Seme in Benin.

Worth a total of $2.3 billion (around FCFA1,200 billion), this pipeline will enable Niger to export its oil to the international market from the aforementioned port.

This means a loss of earnings for the deep-sea port of Kribi, a seaside resort in Cameroon’s southern region, which had initially been chosen. “The oil we propose to exploit is located in the eastern part of our country, close to the border with Chad. President Issoufou has found it convenient, practical and economical to export it through a pipeline already in operation, which links Chad to the port of Kribi”, revealed the then Foreign Minister of Niger, Mohammed Bazoum, on February 28, 2012 in Ndjamena. This was after an audience with Chad’s Head of State, the late Idriss Déby Itno.

On October 30, 2013 in Yaoundé, just over a year after the announcement made in the Chadian capital, the project agreement was signed between the locals and Nigerian authorities. The deal set out the conditions for the transit of Nigerian oil on Cameroonian territory. Cameroon is home to around 1,000 km of the 1,070 km pipeline linking Chad’s oil fields to the deepsea port of Kribi. With the Niamey project, a new and important source of revenue for Cameroon was in prospect, thanks to the right of transit.

As a reminder, the transit duty is the tax paid to the Cameroonian Treasury by oil companies exporting their crude via the Chad-Cameroon pipeline, depending on the quantities exported. For every barrel of Chadian oil transiting its territory, for example, Cameroon collects a royalty of $1.321 from the companies exploiting oil in Chad. This royalty, which was initially $0.41, was readjusted at Cameroon’s request in 2013 and again in 2018, after bitter negotiations. The amendment to the Cotco establishment agreement (the company operating the pipeline), signed on October 29, 2013, provides for the revaluation of this fee every 5 years, based on the average annual inflation rates recorded in Cameroon during this period. On this basis, the transit fee rate is due to be increased again from October 1, 2023.

The Boko Haram threat

In detail, over the 3 years from 2020 to 2022, the right of transit of Chadian oil on Cameroonian territory brought the country total revenues of FCFA113.6 billion, according to data revealed by the Customs Directorate of the Ministry of Finance. According to the same source, in 2022 alone, Cameroon earned FCFA36.5 billion from this tax. This represents an increase of almost FCFA5 billion, compared with the FCFA31.3 billion collected in 2021.

Following the example of Chad, oil production in Niger, which aims to export 90% of the 200,000 barrels of crude oil per day projected from the Agadem fields by 2026, was expected to generate substantial revenues for Cameroon. However, the situation changed at the end of 2014. The Nigerian authorities began to hesitate about connecting to the Chad-Cameroon pipeline. Officially, the reasons for this hesitation were “growing insecurity on its borders and the permanent threat now posed by Boko Haram in the Lake Chad region”.

Benin, “considered less exposed” to the Boko Haram threat, was finally chosen to enable the export of Niger crude oil, via a 2,000 km pipeline, almost 3.5 times longer than the 600 km of pipeline needed to link the Nigerien Agadem oil fields to the Chad-Cameroon pipeline. Construction work was launched on September 17, 2019, for delivery in 2022. Delivery was finally delayed due to the 2020 Covid-19 pandemic.

The Niger-Benin pipeline was built by the China National Petroleum Corporation (disputes between this company and Chad were also a factor in the decision to opt for a more costly pipeline to Benin rather than a connection to the one between Chad and Cameroon, editor’s note), which also developed the Agadem fields, the exploitation of which ultimately provided no dividends to Cameroon because of Boko Haram.


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