2013-10-11 12:11:13 - New Construction market report from Business Monitor International: "Cameroon Infrastructure Report Q4 2013"
Cameroon's construction sector faces favourable conditions over the medium term as the government continues to prioritise infrastructure investment as part of its 10-year economic plan. Upside potential comes from the government's 20-project public-private partnership (PPP) plan, which includes projects across the construction sub-sectors. We have marginally upgraded our medium-term growth outlook, with average annual growth of 6.5% forecast between 2013 and 2017, and further upside, depending on project progress.
Cameroon's construction sector is expected to post strong growth, regardless of the success of its PPP programme. The government is reinvesting oil wealth into infrastructure. At the same time we are seeing heavy industry companies taking a build-your-own approach to necessary infrastructure. Heavy investment into expanding cement capacity indicates the scale of
the infrastructure build-up and the expectations of continued growth. Expanding local cement supplies should also help to bring down industry costs, which have been highly volatile.
Full Report Details at
- www.fastmr.com/prod/689007_cameroon_infrastructure_report_q4_201 ..
Partially priced in, and posing significant further upside potential, is a list of 20 PPP projects announced by Cameroon's Ministry of Economy, Planning And Regional Development (MINEPAT). The projects, which range from transport, to social and industrial infrastructure, are hoped to be developed over the course of 2013. Contracts will be offered on a build-operate-transfer (BOT) basis. Cameroon has been legally authorised to offer PPPs since the PPP Act was passed in 2006; however, this would be the biggest single PPP programme to-date in the country.
If successful, it would provide further upside to our already bullish forecast, which sees Cameroon's construction sector returning to growth of 7.1% in 2013, following a 2.8% contraction in 2011. A number of new and ongoing projects are supporting this outlook:
* In May 2013 it was reported that trials had begun on the Kribi gas-fired power plant after constriction had been completed. All supporting infrastructure is complete at the power plant, including a new 100km transmission line linking to Edea. Once operational, the power plant will add 216 megawatts (MW) to existing capacity.
* In March 2013, G Power Cement announced plans to build a new cement plant. The US$90mn plant would have the capacity to produce 800,000 tonnes a year once completed, due in 2015. This will be the third cement plant to be opened in Cameroon in just two years, indicating the demand for cement off the back of strong construction sector growth. Cameroon is emerging as an up-and-coming cement producer, as good access to both the booming West African economy and global export routes are bringing in an increasing amount of foreign investment. In May 2012 Addoha Group began construction of a US $25.9mn plant. After a number of delays relating to land disputes, Dangote Cement finally began work on a US$115mn 1.5mpta plant. Both are located in Douala.
* In December 2012,UK energy company Joule Africa announced it had signed a project development agreement with the government of Cameroon to develop an 850MW hydropower plant on the Katsina Ala River. A full feasibility covering the financial and engineering side of the project will be carried out by Lahmeyer International over a 12-month period. It is expected that the first phase will see the construction of a 450MW unit. If feasible, this project would provide a significant boost to the construction sector over the medium term and would greatly enhance electricity capacity in Cameroon, expanding by 40% from current levels.
* In June 2012 it was reported that China ExIm Bank would lend Cameroon XAF241.1mn (US$451mn) to build a 215km road linking Douala on the western coast with capital Yaounde. Chinese financing would cover 85% of the highway's cost. The six-lane highway will be the first new motorway since the country's independence. The project would replace the existing hazardous two-lane highway and cut down the distance between the two cities by 50km. In July 2012 the contract was awarded to China First Highway Engineering Company. Work is due to be completed in 2017. The highway is hoped to boost domestic trade, as well as that of the sub-region.
Development bank funding has also been supporting the construction of the Lom Pangar Hydropower project. In March 2012 the World Bank announced a US$132mn loan, while in September 2012, the EIB announced a EUR30mn loan for the project. Funding for the EUR306mn (US$494mn) project is also being provided by the French Development Agency, the African Development Bank, the Central African Development Bank and the government of Cameroon. The associated dam will help to regulate flow of the Sanaga River, boosting generating capacity of two existing dams by 120MW. It will also see development of a new 30MW power plant, which will replace existing thermal capacity and be used to support rural electrification. Work on the power plant began in August 2012, with the contract having been awarded to China International Water and Electric Corp. The bulk of the project is due to be completed in 2014, with the transmission line to be finished in 2016.
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