Latest news with #BEAC
Mint
29-05-2025
- Business
- Mint
Why big oil turned to Trump for help in Africa
The Trump administration is wading into a long-running dispute between its allies in the oil patch and six Central African countries that could derail fossil-fuel projects valued at more than $130 billion. Officials from the U.S. Treasury and State departments are pushing the countries to resolve a disagreement over the remediation funds owed by Chevron, ConocoPhillips and other oil companies. Such funds are used for future environmental cleanup at exploration sites. An organization of Central African countries—including Cameroon, Equatorial Guinea and Gabon—has long signaled it wants the oil companies to park those funds at the Bank of Central African States, also known as BEAC, to shore up its depleted foreign-currency reserves. Some African officials initially suggested that the companies would be required to deposit as much as $10 billion. The oil companies say that is a risky proposition that doesn't adhere to international best practices. Remediation funds are usually treated as untouchable and held at U.S. or European banks. The companies want to ensure BEAC can't access the remediation funds for other purposes and peg the sum they would owe at closer to $1 billion over a 10-year period. Negotiations have been under way since 2018 but became more urgent when the central bank gave the companies an April 30 deadline to begin depositing the funds. That is when the Trump administration stepped in. Although the first few months of President Trump's second term have largely frustrated American oil producers, many executives say his administration remains an influential ally in their international affairs. The headquarters of the Bank of Central African States, in Cameroon. In this case, the U.S. Chamber of Commerce, which has acted as an intermediary between the African countries and the oil companies, helped bring the dispute to U.S. officials. Representatives from the U.S. State and Treasury departments warned African officials in a meeting in Washington in late April that they would be watching the outcome of the negotiations closely, according to people familiar with the matter. It was the first time U.S. officials had intervened directly in the meetings between the companies and government U.S. doesn't have jurisdiction over the issue but carries weight at the International Monetary Fund, which lends billions of dollars a year to African countries. In March, Rep. Bill Huizenga (R., Mich.) introduced a bill to withhold U.S. support for any IMF action related to the six countries until the matter was resolved. The IMF acknowledged recently, after long deferring on the matter, that the countries couldn't count the remediation funds among their currency reserves under its rules. A spokesman for the IMF said it has been encouraging the parties to come to an agreement. Some of the oil companies are considering pulling out of projects or delaying new investments in the region unless they can reach a deal, according to people familiar with their thinking. All together, the projects at risk are expected to produce more than 1 billion barrels of oil and gas over the next 25 years, according to S&P Global. They are worth a combined $133 billion in government revenue and company cash flow. Energy companies typically share profits and pay royalties and taxes to local governments after they begin pumping oil. Chevron, for example, has an exploration project in Cameroon that has yet to start up. It also operates offshore fields in Equatorial Guinea, a region Exxon Mobil exited from last year. A recent drop in oil prices is forcing the companies to be choosy about which projects they advance. Any new projects in the six countries would have to compete for investments against areas such as Guyana in South America and Angola on the western coast of southern Africa, where the oil companies are eager to shift more capital. 'The countries will lose out the most if they overplay their hand here," said Caleb Jasso, senior policy adviser at the Institute for Energy Research. For the oil companies, 'there are plenty of other places to park capital," he said. 'The companies can take a temporary loss and simply reallocate and strategize, and go elsewhere." For now, BEAC has agreed to be a passive custodian of the funds—which would only be deposited if a deal is struck—and not to impose fines while the parties continue negotiations. A long-term solution remains elusive. The central bank didn't respond to requests for comment. Trump's return to office hasn't yet spurred the golden age of oil and gas that he promised. Since his tariff blitz in early April, the price of crude has fallen 15% to $60.89, a level that shale companies say is untenable for domestic production growth and is cutting into their earnings. Privately, oil executives have complained about the administration's fixation on dropping fuel prices. Some are already cutting spending. Yet in other matters, Trump has shown that he has the industry's back. He exempted oil, natural gas and refined products from the raft of tariffs that are currently paused until July 31. The administration also reduced tariffs earlier this year on Canadian crude after a meeting with oil lobbyists. Write to Collin Eaton at
TimesLIVE
26-05-2025
- Business
- TimesLIVE
Cameroon green-lights R6bn in external borrowing to cover treasury gaps
Cameroon's finance minister has been authorised to raise up to 200-billion CFA francs (R6.18bn) from international financial markets to shore up government cash flows for fiscal year 2025, according to a presidential decree. Kelly Mua Kingsly, head of finance operations of the state at Cameroon's ministry of finance, told Reuters on Wednesday that the government would consider using several market instruments, but most likely syndicated loans. "This is most likely given the urgency and nature of liquidity needs. It is also attractive due to shorter structuring time and flexible drawdown options," Kingsly said. In addition, he said concessional or semi-concessional loans suitable for budget support components and assimilable treasury bonds or treasury bills on the Bank of Central African States (BEAC) market could also be considered. Eurobonds were less likely, he said, due to high global interest rates, low sovereign credit ratings and lower appetite from international capital markets for frontier markets in the wake of the Covid-19 pandemic and during a period of geopolitical risk.
Reuters
21-05-2025
- Business
- Reuters
Cameroon greenlights $347 million in external borrowing to cover treasury gaps
YAOUNDE, May 21 (Reuters) - Cameroon's finance minister has been authorised to raise up to 200 billion CFA francs ($348 million) from international financial markets to shore up government cash flows for fiscal year 2025, according to a presidential decree. Kelly Mua Kingsly, Head of Finance Operations of the State at Cameroon's Ministry of Finance, told Reuters on Wednesday that the government would consider using several market instruments, but most likely syndicated loans. "This is most likely given the urgency and nature of liquidity needs. It is also attractive due to shorter structuring time and flexible drawdown options," Kingsly said. In addition, he said concessional or semi-concessional loans suitable for budget support components and assimilable treasury bonds or treasury bills on the Bank of Central African States (BEAC) market could also be considered. Eurobonds were less likely, he said, due to high global interest rates, low sovereign credit ratings and lower appetite from international capital markets for frontier markets in the wake of the COVID-19 pandemic and during a period of geopolitical risk. The borrowing plan comes as Cameroon faces slow disbursement of external financing and delays in revenue mobilisation, notably non-oil tax collection deficits. Tight monetary policy by the regional central bank to curb inflation and stabilise the CFA franc currency has provoked a liquidity squeeze across Central Africa, while the BEAC's reserve requirement has impacted treasury liquidity. Officials also say the government is keen to diversify its sources to avoid excessive domestic borrowing that could crowd out private sector investment. Cameroon has recently relied on domestic and external borrowing to bridge budget deficits. ($1 = 575.5000 CFA francs)
TimesLIVE
22-04-2025
- Business
- TimesLIVE
Central Africa's new forex initiative misses target, say oil industry sources
Six Central African nations expecting a foreign exchange windfall of billions of dollars from environmental restoration funds set aside by oil firms may in fact see less than $500m (R9.30bn) by an April 30 deadline, two oil industry sources close to the talks told Reuters. Rules governing these restoration funds, mostly held in foreign banks, were introduced in 2018 by the Bank of Central African States (BEAC), the central bank for Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic and Republic of Congo. The aim is to have the funds held in accounts controlled by BEAC to help buttress the six countries' depleted hard-currency reserves and help address their economic fragility. Despite progress in overcoming their differences, however, the oil companies and regional central bank authorities remain at odds ahead of a looming compliance cut-off date and threats of immediate penalties from May 1. The companies affected say for example that the environmental funds are ring-fenced and, based on International Monetary Fund (IMF) guidelines, the countries cannot count them as either gross or net reserves. Currently, the money paid into environmental escrow accounts are staggered, with deposits increasing as projects move towards ending production, a third company official said.
Reuters
22-04-2025
- Business
- Reuters
Central Africa's new FX initiative falls short of target, oil industry sources say
Summary Companies CEMAC region targets $5 bln-$10 bln to boost reserves Oil companies seen paying significantly less Investment into oil-producing region set to decline April 22 (Reuters) - Six Central African nations expecting a foreign exchange windfall of billions of dollars from environmental restoration funds set aside by oil firms may in fact see less than $500 million by an April 30 deadline, two oil industry sources close to the talks told Reuters. Rules governing these restoration funds, mostly held in foreign banks, were introduced in 2018 by the Bank of Central African States (BEAC), the central bank for Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic and Republic of Congo. Make sense of the latest ESG trends affecting companies and governments with the Reuters Sustainable Switch newsletter. Sign up here. The aim is to have the funds held in accounts controlled by BEAC to help buttress the six countries' depleted hard-currency reserves and help address their economic fragility. Despite progress in overcoming their differences, however, the oil companies and regional central bank authorities remain at odds ahead of a looming compliance cut-off date and threats of immediate penalties from May 1. The companies affected say for example that the environmental funds are ring-fenced and, based on International Monetary Fund (IMF) guidelines, the countries cannot count them as either gross or net reserves. Currently, the money paid into environmental escrow accounts are staggered, with deposits increasing as projects move towards ending production, a third company official said. Some projects in the oil-producing Central African region have made no deposits because they are at an early stage and haven't yet established restoration funds, the official added, suggesting governments may have miscalculated the amounts due from these projects. Companies operating across Central Africa, which include Kosmos Energy (KOS.N), opens new tab, Chevron (CVX.N), opens new tab, Vaalco Energy (EGY.N), opens new tab, TotalEnergies ( opens new tab, did not respond to requests for comment. Privately held French operator Perenco, however, said this month that it was in negotiations with regional stakeholders to reach an agreement before the deadline and was already complying with all regulations. One industry source said: "According to our estimates the value might be less than $500 million at the beginning of May, maybe rising to $1 billion over the next decade." That $500 million is around one-tenth of what the six Central African Economic and Monetary Community (CEMAC) states are seeking to strengthen their fragile economies. Another senior industry source briefed on the matter said the aggregated company figures may range between $350 million to $400 million. Reuters was unable to independently verify the amounts. All company and industry sources did not want to be identified due to the sensitivity of the ongoing discussions. Gabon, which went to the polls this month following a coup in 2023, said in January that funds from the region's Oil Site Rehabilitation Fund (RES) could rake in from 3 to 6 trillion CFA francs, or about $5 billion to $10 billion. The six CEMAC states - Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic and Republic of Congo - use a shared currency and have BEAC setting their monetary policy. Neither they nor BEAC immediately replied to requests for comments. INVESTMENT SEEN PLUNGING Discussions are deadlocked over several core issues, including BEAC's refusal to waive its sovereign immunity of execution right, meaning court decisions against it are unenforceable. That is a major sticking point, according to the sources. The standoff between foreign investors and Central African monetary authorities has also caught the eye of Republican lawmakers in the United States. In March two members of Congress introduced a bill critical of CEMAC's stance and threatened to block IMF support for countries in the region. The IMF, a top regional creditor, said it was aware of the legislation and was monitoring developments. It plans to visit the region after its annual Washington spring meetings, a spokesperson said. Last month, S&P Global Insights said it expected the region to lose an estimated $45 billion in investment by 2050, marking a 54% decline from the baseline, if the new FX rule is implemented, illustrating CEMAC's precarious position. A fourth industry source told Reuters their company would not be going ahead with investments unless there is a positive outcome to these issues.
