Gov’t resists pressure to hike domestic gas price.

The firm is insisting that the current market price of 6,500 FCFA for a 12 kg bottle is too low to enable the company break even.

But the recent 20% unilateral increase in price imposed by GDC has been revoked by the government. 

The new price suspension was announced by the Minister of Trade, Luc Magloire Mbarga Atangana. This was after a consultation meeting held in Yaounde July 13. 

Meanwhile, GDC tentatively announced the price increase since May 15, warning that the new price will take effect from 1 June 2023. 

GDC justified the increase by explaining that production costs had risen astronomically due to the volatile international economic climate.

The decision immediately sparked a dispute between the gas supplier, and its customers, who vehemently opposed it. 

Government also requested GDC to suspend its decision pending approval as stated in decree No. 2023/232 of May 4, 2023, which outlines the guidelines for the application of the petroleum code law no. 2019/008 of April 25, 2019.

However, GDC did not budge. Rather, it tried to rally support from minor suppliers. In a letter to the president of the Association of Industrial Gas Consumers dated June 6, its Managing Director, Éric Friend, indicated the 20% price increase would be maintained.

According to authorised sources, during the July 13 consultation meeting, Gaz du Cameroun indicated that it was not bound by the 2019 petroleum law and its implementing decree but by the investment agreement it signed with government in 2009. 

In short, it was rejecting being subjected to the obligation of getting its pricing decisions approved by the government. 

To counter that argument, Minister Mbarga pointed at a provision of the said investment agreement that formally requires GDC to negotiate any price increase with the government, notably through the National Hydrocarbons Corporation, SNH and the Ministry of Mines. 

Based on the said provision, Minister Mbarga suspended GDC's decision to raise prices for industrial users starting from June 1, 2023. 

The minister invited the company to comply with the regulations in force in the country, either by adhering to the provisions of the 2019 petroleum code, which require prior price approval by the Ministry of Trade before any increase, or by respecting the investment agreement signed with the State in 2009, which recommends prior negotiation between the State and the gas producer before any price adjustment. 

The said decision should be reflected in the invoices for June 2023, which GDC is yet to send to its thirty or so clients in the Douala-Bassa industrial zone, as of July 18, 2023.

The backlash against the increase in gas prices for industrial users stems from the fact that it would further inflate production costs for companies. 

This comes after the 2023 finance law extended the special tax on petroleum products to natural gas. Consequently, consumers of this product now have to pay a tax of 70 FCFA per cubic meter of gas consumed.

The said measure coincided with that of the Electricity Sector Regulation Agency, ARSEL, also increasing electricity rates by nearly 30% for "large accounts" customers, which includes energy-intensive industrial enterprises. 

Additionally, since February 1, 2023, the prices of gasoline, diesel, and super used by industrial users have also increased, with price hikes of 15.8%, 25.2%, and 36.5%, respectively.