Assessing The Fulcrum Of The Legal And Fiscal Framework In The Hydrocarbon Sector: The Prospects And Challenges In Cameroon
Volume 6 - Issue 5, May 2023 Edition
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Bande Gulbert Mbah Tarh
Cameroon, Challenges, Fiscal Framework, Fulcrum, Hydrocarbon, Prospects
Hydrocarbon resources play a significant role in driving economic growth in many countries, mobilising the necessary revenues for public services and lifting people out of poverty. Nonetheless, in some developing countries the clear legislative and regulatory frameworks, and optimal fiscal regimes required for using such hydrocarbon resources to drive economic growth are lacking or deficient. As such, a clear set of rules and fiscal regimes is essential to attract investors and a prerequisite for a socially and environmentally sustainable sector. From this, the impacts of hydrocarbon discoveries have prompted the Government of Cameroon (GoC) to review its 1999 Petroleum Code by adopting a new one in 2019. The revision was made with an eye on increasing revenue collection and sustainable incentives for investment. In this regard, the paper examines the general legal fulcrum of the hydrocarbon sector on the one hand, while synchronising the legal and fiscal framework in the hydrocarbon sector in Cameroon on the other. By critically analysing the prospects and challenges to enhance sustainable hydrocarbon investments, as a stand-alone analysis of the Code reveals that issues linked to implementation and investment cost control are crucial in determining a fair share of revenues for the country. Besides, a comparative analysis of the new Code’s fiscal provisions with those of other peer countries suggests that it embeds tools to ensure revenues while still catering for investor needs. The revenue simulations comparing the 1999 and the 2019 Codes reveal a high revenue potential for the latter. Despite these, to ensure that the GoC reaps the full benefits from the provisions of the new Code, the paper highly recommends that the regulatory and commercial roles of SNH be unbundled and separated. So that SNH can concentrate more as a strictly commercial company, while the other institution concentrates on the regulatory role of the hydrocarbon sector.
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