Cameroon is actively working to secure financing for the Nachtigal hydroelectric dam. The Ministry of Finance, in collaboration with its financial partners, is working to implement a coordinated operation to replenish a standby letter of credit (SBLC) of over 86 million euros, approximately FCFA 56 billion. This initiative is being conducted with the assistance of SCB Cameroon and Financia Capital, acting as arrangers.
Technical discussions are in the final stages, following the approval in principle given by the Minister of Finance. The main objective is to finalize the operation's coverage documents, which are currently in the legal phase. The operation could involve a syndicated arrangement, with the participation of several financial institutions, including Attijariwafa Bank, SCB's parent company.
The urgency of this approach lies in the need to replenish the guarantee mechanism before April. Cameroon is thus seeking to avoid the activation of the counter-guarantee granted by the World Bank to Société Générale Paris. This scenario, feared by both the Cameroonian authorities and the World Bank, could lead to the suspension of certain World Bank funding to Cameroon, with potentially significant repercussions beyond the Nachtigal project alone.
The SBLC, with an initial amount of FCFA 56 billion, was put in place to cover the State's payment obligations, particularly in the event of default by Éneo, the purchaser of the electricity produced by the dam. However, Éneo's successive payment defaults have led NHPC to activate this guarantee to the tune of FCFA 55 billion, thus exhausting almost all of the envelope.
This financial operation comes in the context of negotiations for the establishment of a FCFA 100 billion financial guarantee mechanism in the form of a revolving fund, initiated by the Ministry of Finance since the fourth quarter of 2025. The State's payment arrears to NHPC now exceed FCFA 70 billion.
Beyond the technical aspects, the major challenge for Cameroon is to maintain its credibility with international donors. The country's ability to replenish this safety net conditions the financial continuity of the Nachtigal project and the quality of its relations with its financial partners.
The rapid finalization of this operation is crucial to avoid the implementation of the international counter-guarantee, a strong signal as to the financial soundness of the Nachtigal project.
