Cameroon PPP: Tollcam Fayat CFA3.1 Billion Debt Signals Collapse

• Tollcam Partenariat, a company for Cameroon's automated toll stations, owes Fayat €4.73 million (CFA3.10 billion) in net loans.
• Fayat's gross financial exposure to Tollcam reached €4.93 million (CFA3.23 billion) as of September 30, 2024.
• Tollcam reported a €51,000 loss and negative shareholders' equity, with no revenue recorded.
• Fayat's investment in Tollcam, a joint venture with Egis, has been fully impaired in its accounts.
• The project involved Fayat acquiring shares from Razel-Bec and Razel Cameroon in early 2021, with Razel-Bec initially tasked with construction.

This case serves as a stark reminder of the significant financial risks inherent in public-private partnership infrastructure developments, particularly for private partners.

Tollcam Partenariat, the entity established to oversee the development of automated toll stations across Cameroon, continues to carry a substantial financial obligation to the French industrial group Fayat. According to Fayat's company accounts for 2024, which concluded on September 30, 2024, Tollcam still owes Fayat €4.73 million in net loans and advances, equivalent to approximately CFA3.10 billion. This significant Tollcam Fayat CFA3.1 billion debt highlights the financial strain following the apparent collapse of the Cameroon PPP project.

Fayat's total gross financial exposure to Tollcam reached €4.93 million, or about CFA3.23 billion, as detailed in the same financial disclosures. The project, intended to modernize Cameroon's road infrastructure through a public-private partnership, has evidently encountered severe difficulties, leading to considerable financial implications for its private sector participants.

Further analysis of Fayat's financial statements reveals the depth of Tollcam's operational and financial challenges. Tollcam reported a loss of €51,000, which translates to approximately CFA33.5 million, with no revenue figures disclosed for the period. The company's shareholders' equity, excluding its share capital, stood at a negative €481,000, or roughly negative CFA315.5 million, against a reported share capital of just €8,000.

Reflecting the dire financial situation, Fayat's shares in Tollcam were recorded with a gross value of €8,000 but a net value of zero. Consequently, Fayat's entire investment in Tollcam has been fully impaired within its group accounts, indicating a complete write-down of its value. No dividends were recorded from the venture, underscoring the lack of profitability and the significant financial setback for Fayat.

Tollcam Partenariat is structured as a joint venture, with equal ownership stakes held by Fayat and Egis. The current ownership configuration came into being in January 2021 when Fayat acquired 50 shares in Tollcam. These shares were previously held by Razel-Bec and Razel Cameroon, indicating a shift in the private sector partners involved in the Cameroon toll road PPP collapse.

Under the initial framework of this public-private partnership, Razel-Bec, which operates as a construction subsidiary of Fayat, was designated as the entity responsible for the construction of the necessary infrastructure for the automated toll stations. This arrangement illustrates the complex web of relationships and responsibilities typical of large-scale infrastructure PPPs.

This case serves as a stark reminder of the significant financial risks inherent in public-private partnership infrastructure developments, particularly for private partners. The substantial Fayat Tollcam financial exposure and the full impairment of Fayat's investment underscore the critical need for robust due diligence and comprehensive risk allocation mechanisms in PPP contracts, especially in emerging markets like Cameroon.

Lawyers advising on such projects in Cameroon or similar African jurisdictions should view this as a cautionary tale. It highlights the potential for project failure and the long-term financial liabilities that can accrue, emphasizing the importance of thoroughly assessing project viability and ensuring contractual frameworks adequately protect all parties involved against unforeseen challenges and investment impairment.

Lawyers advising on Public-Private Partnership (PPP) projects in Cameroon or similar African jurisdictions should note this case as a cautionary tale regarding the significant financial risks and potential for project failure, particularly concerning private partner exposure and investment impairment. It underscores the critical need for thorough due diligence on project viability, robust risk allocation in contracts, and understanding the long-term financial liabilities for all parties involved in such complex infrastructure developments.

Source: Information derived from Fayat's financial disclosures