The Cameroon government is continuing its process to extend the special tax on petroleum products to natural gas, despite a request from Gaz du Cameroun (GDC), a subsidiary of the British Victoria Oil & Gas (VOG), to stop it.
Per this process, industries powering their plants with natural gas will pay CFA70 per cubic meter consumed. In a note sent on January 4, 2023, to its customers, GDC announced it has engaged in discussions with the government to suspend the measure but the Minister of Finance, Louis Paul Motazé (pictured), issued a statement on January 11 saying the government has denied the request.
“(…) I hereby inform you that the TSPP (the above-mentioned tax, ed) is not a new tax. As the legislation stands, this tax already applies to petroleum products, in particular to super and diesel fuel. Natural gas, which is also a petroleum product, had not yet been included for the simple reason that it was developed only recently. The provision contained in the Finance Act 2023 is therefore for reasons of fairness and broadening the tax base, to extend the application of the TSPP to this product,” says Minister Motazé.
“Moreover, this tax is an indirect levy on the final consumer and is not borne by the holders of oil contracts, who are only legal debtors. It cannot, therefore, call into question the stability clauses of oil contracts,” he added, reminding GDC that the extension of the TSPP to industrial gas is not a burden for this company, which will just collect it for the State, and that it is rather an additional burden for industrials.
Let’s note that in addition to the TSPP that they are now obliged to pay, depending on their consumption, companies, which see natural gas as an alternative fuel in the face of recurrent power cuts in the country, will also have to face an increase in electricity rates of 30% from the current year 2023. The increase was decided by the Agency for Regulation of the Electricity Sector (Arsel). This, coupled with the extension of the TSPP to natural gas, will result in additional production costs for companies, which could be passed on to consumers in final prices, thereby aggravating inflation.
Brice R. Mbodiam