The Legal Framework of Cameroon's Railway Sector: An Overview through Q&As

Cameroon, much like many other African nations, possesses a relatively modest railway transportation system. Historically, this railway network was inherited from colonial powers who primarily utilized it for the transportation of natural resources and tropical agricultural goods from the country's interior to coastal ports for exportation to markets in Europe, North America, and, in some instances, Asia.

In the case of Cameroon, the railway infrastructure was initially established by the Germans between 1884 and 1916, a period during which they held Cameroon as their protectorate (colony). Subsequently, control of Cameroon shifted to the French and British after WW1 that saw the country split between the two colonial powers, who expanded the existing railway networks to connect the interior regions, facilitating the transport of valuable commodities like palm nuts, bananas, rubber, and other valuable natural resources to the ports in Douala for international trade. Remarkably, since achieving independence in the 1960s, Cameroon has made minimal to no additions to its railway infrastructure.

Present State of Cameroon's Railway System

Presently, Cameroon's railway system spans approximately 1000 kilometres. Emerging from Douala, the country's economic heart with the largest seaport in the Central African Economic and Monetary Community (CEMAC) subregion, these railways extend in two directions: the Douala-Kumba western line and the Douala-Yaoundé-Belabo-Ngaoundéré line. For many communities, the railway remains the primary mode of transportation. Moreover, the Douala-Yaoundé-Belabo-Ngaoundéré railway line plays a pivotal role in national and international trade in goods. Goods arriving at the main deep-sea port of Douala are transported through this rail network to Belabo-Ngaoundéré, from where they are further transported by land to landlocked countries in the CEMAC, such as the Central African Republic and Chad and vice versa. As an illustration, on July 10, 2023, the Minister of the Economy, Planning, and Regional Development initiated a restricted national call for tenders to pre-select offices, firms, or groups for conducting architectural and technical studies for the construction of the Ngaoundéré dry port in the Adamaoua Region.

Management of Cameroon's Railway Network

The management of Cameroon's railway network falls under the purview of a concession granted to Cameroon Railways (CAMRAIL), an entity holding a virtual monopoly over the market. SCCF (part of Groupe Bolloré) held a majority stake of over 77 percent in CAMRAIL before its stake was recently sold to Africa Global Logistics, part of the MSC group, while the Cameroonian government retains just over 13 percent, with the remaining portion being held by Total Energies. CAMRAIL emerged from the privatization of the formerly state-owned Cameroon National Railways, securing its concession through negotiations between January 1996 and January 1999, which took effect in April 1999, initially for a twenty-year term. The concession, a crucial component of Cameroon's economic restructuring plan mandated by the International Monetary Fund at the time as part of Cameroon's debt relief programme, entrusts CAMRAIL with technical and commercial management of the railway system, maintenance, infrastructure development, exploitation, and railway estate management. The concession is valid until 2034.

Evolution of Legal Framework

The legal framework governing Cameroon's railway system was previously rooted in Law No. 74/016, enacted on July 16, 1974, establishing regulations governing railway policing and safety. Given the significance of the railway sector to the nation's economy, this law was deemed inadequate. Consequently, when Cameroon negotiated the concession held by CAMRAIL today, it was integrated into the regulatory framework governing railway transportation in Cameroon. With the CAMRAIL concession set to expire in 2034, and eager to improve its infrastructure as part of its National Development Strategy for 2020 to 2030, Cameroon enacted legislation in July 2023 to regulate the railway sector and to open up the railway market to new players.

Law No. 2023/010: New Legal Framework

Law No. 2023/010 governing the railway sector of July 25, 2023, lays down the new legal framework for the railway sector. Recognizing the sector's underdevelopment, this law outlines its objectives in Section 2, which include defining rules governing the roles and interactions of various institutional stakeholders in the railway sector, conditions for constituting and managing railway assets, standards for constructing, operating, maintaining, replacing, developing, and managing railway networks, railway safety and security, regulations governing railway professions and technical personnel, civil and environmental protection, dispute resolution among key players, and penalties for violations of the law.

Key Developments and Influences on the Law

It is worth noting that this law is the result of several significant events.

Firstly, on October 21, 2016, a significant train derailment occurred in Eseka, a small town in the Centre Region of Cameroon, resulting in 79 reported casualties and over 600 wounded individuals. In response to this tragic incident, the President of the Republic of Cameroon established a Commission of Inquiry to conduct a thorough investigation into the train derailment. This Commission completed and released its report seven months later in May 2017, attributing full responsibility for the derailment to the concessionaire CAMRAIL.

Secondly, it follows a recent visit by a delegation from the National Assembly's Production and Trade Commission. During this visit, CAMRAIL reported investments totalling XAF 700 billion, which is just over one billion Euros, since the beginning of its concession in 1999. They also disclosed payments exceeding XAF 240 billion, approximately Euro 367 million, to the State in fixed and variable fees, taxes, and duties. Additionally, they highlighted investments exceeding XAF 288 billion, approximately Euro 440 million, in upgrading and maintaining the railway network.

Thirdly, this law also follows Parliament's assessment of the ongoing deterioration of infrastructure, a significant decline in passenger numbers from 1.4 million in 2010 to 600,000 in 2021, a drop in the volume of transported goods from an estimated 1.9 million tons in 2010 to 1.6 million tons in 2021, and the closure of the Mbanga-Kumba and Ngoumou-Mbalmayo routes. It is evident that inadequate investment, declining service quality, and the weakening of the State's control and sanction mechanisms in this sector have led to a progressive loss of competitiveness. In response, negotiations are underway with the Agence Fran?aise de Développement (AFD) for a loan of 126 million Euros to renovate the Belabo-Ngaoundéré railway line.

Finally, it is important to recognize that this law lays the groundwork for several long-anticipated railway projects. The 2022 Cameroon Economy Report, published by the Ministry of Economy, Planning, and Regional Development, delineates a series of significant railway initiatives. These encompass the development of the Douala-Limbé-Idenau railway line, which will establish a crucial connection to the planned Limbe deep-sea port, greatly bolstering trade opportunities.

Furthermore, there is a proposal for the Ngaoundéré-N'djamena (Chad) rail, poised to facilitate international trade with landlocked Chad. The report also underscores the establishment of the Douala-Ngaoundéré railway connection, the construction of the Edéa-Kribi-Campo railway, forging a vital link to the new Kribi deep-sea port and its connection to inland regions, as well as the implementation of the Mbalam-Kribi railway project. The latter's objective is to link the Mbalam iron ore mines to the Kribi deep-sea port for streamlined exportation.

Additionally, the report outlines Cameroon's strategic goal, in collaboration with private partners, to expand its railway network to 5,500 kilometers by 2030. However, given that we are already in 2023, achieving this ambitious target within the remaining timeframe raises questions about its feasibility.

Scope and Institutional Players

The law has an extensive scope, encompassing all railway activities conducted within Cameroon's national territory by any railway operator, regardless of their legal status, location of their headquarters or principal place of business, nationality of owners or managers, or the geographical origin of their capital. It applies to all aspects of rail transportation and industry, including infrastructure, rolling stock, management, safety, security, and regulation.

Q&A Section:

1. Who are the institutional players in the railway sector in Cameroon according to this law?

There are three core institutional players in the railway sector expressly identified by the law:

§? The State of Cameroon;

§? Rail Asset Management Company; and

§? Railway Regulatory and Safety Authority.

That said, there are other institutional players also identified (expressly and impliedly) in the law who form part of the State of Cameroon and will play a crucial role in the regulation and management of the railway sector include:

§? The Presidency of the Republic, which is responsible for, among other things, putting in place the Decree that regulates the Asset Management Company and the Railway Regulatory and Safety Authority, and approving railway concessions.

§? The Ministry of Transport, responsible for the regulation of the transportation sector, including the railway sector.

§? The Ministry of Finance, including its Directorates of Taxation, Treasury, Customs, and Budget.

§? The Ministry of Public Works, responsible for all government public works.

§? The Public Contracts Regulatory Agency, which handles government calls for tenders.

§? The Ministry of Environment, Protection of Nature, and Sustainable Development, responsible for environmental protection and environmental permits.

§? The Ministry of Economy, Planning, and Regional Development, responsible for, among other things, the public investment programs of the State as well as lending agreements on behalf of the State for infrastructural projects.

§? The Ministry of State Property, Surveys, and Land Tenure, responsible for, among other things, all private property of the state and expropriation of private land for right-of-way.

§? The Ministry of Housing and Urban Development, responsible for, among other things, the oversight on the planning of urban rail transport networks.

§? The Ministry of Decentralization, also responsible for, among other things, supporting local and regional authorities as far as urban rail transport network developments are concerned.

2. What is the role and responsibility of the State as an institutional player?

The law grants the State sovereignty over the national railway network with the authority to lay down the national rail transport policy in accordance with relevant international standards, conventions, and agreements, as well as to promote and develop railway activities. The role of the State as an institutional player is primarily implemented by the Ministry of Transport.

Regarding national rail transport policy, the State is responsible for legislating on conditions for rail transport; establishing regulations and overseeing rail activities; ensuring a consistent and functional national rail system; and providing accessible rail-related statistics and information.

Regarding its obligation to promote and develop railway activities, the State has the duty to coordinate and improve quality for rail users; enhance urban and inter-urban transport; develop railway freight activities; ensure operational sustainability and crisis management; ensure safety for people, property, and the railway facilities, as well as prevent actions that threaten rail safety; organize and guide the rail industry through training and research; plan and execute railway networks; promote network expansion and intermodal transport; support interconnection with other countries; and negotiate and implement rail transport agreements.

Finally, regarding monitoring and control, the State shall supervise rail assets under concession; evaluate railway operators' activities and ensure competitiveness, fairness, and price optimization in rail transport.

3. What is the Rail Asset Management Company, and what will be its role and responsibilities?

The Rail Asset Management Company is an innovation brought about by this law. Previously, rail assets were managed under the CAMRAIL concession. This company, whose structure will be defined by decree of the President of the Republic, is responsible for managing State-assigned rail assets and rights (identified below); issuing access authorizations to railway operators to railway infrastructure; overseeing train operations; safeguarding railway infrastructure; renewing and developing railway infrastructure; and protecting public railway assets.

4. What is the Railway Regulatory and Safety Authority, and what will be its role and responsibilities?

The Railway Regulatory and Safety Authority is another innovation introduced by this law, prompted by a deadly train derailment in 2016. This Authority's organization and functioning will be determined by a decree from the President of the Republic in the future. Its responsibilities include regulating railway agreements; ensuring safety standards are met; amicably resolving disputes between actors in the railway sector; protecting user rights; applying regulations; promoting healthy competition; advising on sector policies; conducting audits; participating in accident investigations; proposing sanctions for breaches; approving tariffs; and negotiating railway transport agreements. The law grants its employees the status of special jurisdiction criminal investigation officers for matters related to railway safety and security.

5. What comprises the railway network under this law?

The railway network encompasses all public or private railway infrastructure within the country intended for the operation of rail transport services. It includes both the national railway network and secondary railway networks.

6. What comprises the national railway network?

The national railway network comprises all State-built railway infrastructure designed for public goods and passenger transport services by rail. This network includes various components like railway infrastructure, tracks, sidings, mainlines for private railway branch lines, signalling, buildings, level crossings, and electrical installations. It is considered part of the public railway right-of-way, excluding movable property associated with the infrastructure.

7. What comprises the secondary railway network?

Secondary railway networks encompass various specialized networks, including port railway networks, airport railway networks, urban rail transport networks, private branch lines, and private railway facilities.

The port railway network and the airport railway network form part of the public railway right-of-way and are constructed based on a separate agreement between the Railway Management Company and the entities responsible for the management and operation of the port or airport.

Urban transport railway networks are designed for urban passenger transport and can be constructed by regional or local authorities or assigned to them by the State. The conditions for the construction, operation, and maintenance of an urban passenger railway network under the law are laid down in a concession agreement between the regional and local authorities and the concessionaire.

Private railway branch lines connect businesses or industrial areas to the national railway network, enabling the transportation of goods without reloading. The Railway Assets Management Company can grant rights for constructing these private branch lines to various enterprises, subject to regulations defining their establishment, construction, operation, and maintenance.

Lastly, the private railway facilities are railway infrastructure built on private property for commercial, agricultural, industrial, recreational, or professional railway training purposes. Their construction, management, and operation will be laid out in a regulation that will implement the railway sector law.

8. What are the regimes to conduct railway activities in Cameroon?

The law provides for four main regimes for the management of national railway networks in Cameroon: Concession, License, Authorization, and Declaration.

9. What does the concession regime entail under this law?

The State can grant concessions for three primary purposes: construction, rehabilitation, and renewal of railway infrastructure; management of the national railway network; and technical and commercial operation of rail freight and/or passenger services, including maintenance of railway infrastructure. These concessions are exclusively granted to a rail assets management company, and specific provisions define the scope, duration, and conditions for renewal of the concession.

Concession agreements must comprehensively address various critical elements, including infrastructure management, construction terms, financial contributions, user treatment, applicant qualifications, and financial guarantees. Once negotiated, the agreement is co-signed by the Minister of Transport, the Minister of Economy, and the Minister of Finance representing the State and the rail assets management company, contingent upon approval by the President of the Republic.

10. What does the license regime entail under this law?

Under the license regime, various railway-related activities fall within its purview, including the technical and commercial operation of public transport services for both passengers and goods, along with maintenance services. Additionally, the license regime covers the provision of commercial services associated with railway activities.

The process of issuing licenses is overseen by the Rail Assets Management Company, which reviews applications and grants licenses, contingent upon approval from the Railway Regulatory and Safety Authority. Detailed conditions and procedures for licensing will be specified by regulations, providing clear guidelines for applicants and operators within the railway sector.

11. What provisions of the law apply to both the concession regime and the license regime?

Several provisions apply to both the concession and the license regime, including regulatory compliance, financial transparency, security and defense requirements, environmental responsibility, operational standards, performance metrics, and adherence to international obligations.

12. What are the authorization and declaration regimes?

The law does not define the authorization and declaration regimes but provides that conditions for obtaining and issuing authorization and for exercising the declaration will be established by a regulation. Such a regulation has not yet been issued, and it is unclear which railway activities will require authorization and which will need to be declared to regulators.

13. Does the new law open up the market in this sector?

Yes, the law prohibits actions aimed at preventing, restricting, or distorting competition within railway operations. This prohibition applies particularly to actions that limit market access or free competition for other railway operators and distort pricing in the market by artificially manipulating price increases or decreases. The law nullifies any undertaking, agreement, or contractual clause that promotes practices against free competition. Additionally, the Cameroonian law on competition applies to antitrust issues within the railway sector.

14. What are the rail assets in Cameroon under this law?

Rail assets under this law comprise railway public assets and the private property of the State and other legal persons governed by public law, exclusively used for railway activities. The law defines the scope of these assets, including railway infrastructure, land within railway rights-of-way, and assets used for railway activities.

15. Does the law allow for the expropriation of private property for the construction of railways and right-of-way?

Yes, the law does permit the expropriation of private property for the construction of railways and the establishment of right-of-way. According to the law, private property, whether built upon or not, within the boundaries of the planned right-of-way, shall undergo expropriation and be reclassified as public property. This process is carried out in accordance with the conditions specified in the land tenure legislation.

In cases where expropriation is required, it follows the procedures outlined in Decree No. 87-1872, dated 16 December 1987, which implements Law No. 85-9, enacted on 4 July 1985, detailing the procedures for expropriation for public purposes and the conditions for compensation. The Ministry of State Property, Surveys, and Land Tenure oversees the expropriation process. It's important to note that the responsibility for compensation falls upon the party on whose behalf the land is expropriated.

In summary, the law does indeed allow for the expropriation of private property for railway construction and right-of-way establishment, with clear procedures and compensation requirements in place to ensure fairness and legal compliance.

16. Are there specific investment incentives for the railway sector in Cameroon, similar to other sector-specific laws?

The railway sector law in Cameroon does not include sector-specific investment incentives. However, Cameroon has established a comprehensive set of Private Investment Incentives through Law No. 2013/004, enacted on April 18, 2013, and subsequently amended in 2017. This law offers a wide range of tax and customs incentives, including exemptions from Value-Added Tax (VAT), corporate income tax, tax on profits and dividends, registration fees, stamp duties, duty-free importation and exportation, and more.

These incentives are applicable without exception during the establishment phase, which extends for up to five years. They also continue to apply during the operational phase for a maximum of ten years. Additionally, the law provides foreign investors with the privilege to repatriate their profits abroad in local and foreign currencies, and they can maintain accounts both within Cameroon and abroad in local and foreign currencies.

Furthermore, during the negotiation of concession agreements under the mentioned concession regime, investors have the opportunity to negotiate for tax, customs, and other investment incentives to cover their investments over a specified time period. They can also obtain investment guarantees from the State, as is customary, and internationalize the concession agreement, especially in terms of dispute settlement.

In conclusion, this comprehensive legal framework, while not specific to the railway sector, offers substantial incentives to encourage investment and promote economic development in Cameroon.

17. What are the safety and security provisions envisaged by this law?

The law places significant importance on adhering to safety rules across various facets of railway operations, including railway infrastructure, rolling stock, and railway traffic management. The law also emphasizes railway security but notes that specific rules related to railway policing and security will be established through separate instruments.

18. Are there any insurance requirements for railway operators under this law?

The railway sector in Cameroon is subject to a broad insurance regime outlined in Sections 88 to 93 of the law.

Firstly, all railway rolling stock used in rail transport must be insured by the operator, adhering to the prevailing regulations. This provision ensures that the equipment used in railway operations is adequately covered by insurance, promoting safety and accountability within the industry.

The law also introduces the requirement for railway operators to obtain an "occupational risks insurance policy" for their technical and commercial staff on board trains. This policy aims to safeguard the well-being of employees engaged in railway operations, offering financial protection in case of work-related accidents or injuries.

Moreover, the law also mandates railway operators to secure various insurance policies covering risks associated with their operations. These policies must be submitted to the Railway Regulatory and Safety Authority before commencing operations, ensuring that operators are financially prepared to address any unforeseen circumstances.

Section 93 underscores the seriousness of compliance with these insurance provisions. Failure to adhere to the insurance obligations outlined above may result in penalties in accordance with the prevailing laws and regulations, highlighting the importance of strict adherence to the established insurance requirements.

19. What are the civil protection obligations under this law?

Civil protection within the railway sector is essential, and measures are outlined to prevent serious railway accidents or disasters, including organizing relief operations in the event of disasters. Various stakeholders collaborate to ensure civil protection, with transparency and public awareness emphasized to empower communities to make informed decisions.

20. What are the environmental obligations under this law?

The law commits to environmental protection within the railway sector and aligns rail activities with international and domestic environmental laws. It addresses environmental impact, waste management, transportation of hazardous substances, transparency, and public awareness regarding environmental effects. Local populations living along railway lines are encouraged to participate in environmental management.

21. What are the provisions on dispute settlement?

The law provides for dispute settlement mechanisms, including conciliation procedures for disputes between rail users and operators. Disputes between rail transport operators must first be referred to the Railway Regulatory and Safety Authority, which can seek conciliation and, if necessary, arbitration procedures even though parties retain their right to seize courts following failure of conciliation. Precautionary measures may be taken to ensure the continuity of rail transport public service in cases of disputes that threaten to disrupt rail activities.

22. How did the Eseka derailment on October 21, 2016, contribute to the formulation of this law and its associated innovations?

After the derailment in October 2016, as introduced earlier, the President of the Republic swiftly established a Commission of Inquiry tasked with investigating the incident. Their findings were made public seven months later, in May 2017. Prior to the report's release, on January 23, 2017, the President, through the Secretary General at the Presidency, issued a Press Release. This announcement stated that the President had utilized the report's findings to initiate five specific measures aimed at reducing the risk of similar disasters in the future. These measures included:

·???????? Conducting an audit of the concession agreement: The President sought to review the concession agreement signed on January 19, 1999, between the State of Cameroon and CAMRAIL, as well as the two subsequent addendums signed in 2005 and 2008. The objective was to assess whether CAMRAIL had fulfilled its designated responsibilities.

·???????? Initiating discussions among CAMRAIL's partners: These discussions aimed to increase the State's involvement in the company and address social concerns, particularly regarding passenger transport.

·???????? Establishing a railway assets management company: The creation of this company was outlined in the concession agreement of CAMRAIL (but never implemented) and would be responsible for maintaining the railway network, as well as executing projects to modernize and extend the railway tracks.

·???????? Imposing appropriate sanctions against those responsible, whose involvement in the accident was acknowledged in the investigation report.

·???????? Referring the investigation report to the courts to enable them to draw all necessary legal conclusions.

Without a doubt, the report following the accident greatly influenced this law. Cameroon transitioned from a virtual railway sector monopoly to one open for competition, as outlined in the law and this article. Additionally, the law established the Rail Assets Management Company and increased the State's involvement in the sector by creating a regulatory authority, specifically the Railway Regulatory and Safety Authority. Furthermore, the law introduced sworn officers of the Railway Regulatory and Safety Authority responsible for investigating and determining offenses as outlined in this law and its relevant regulatory instruments. In this capacity, they are responsible for drafting reports on all operations conducted during investigations. Finally, the law introduced a range of offenses and associated administrative and criminal sanctions for these offenses.

Conclusion

In summary, Cameroon's newly enacted railway sector law, prompted by a tragic 2016 derailment, marks a significant shift from outdated regulations to a more open and modernized market framework. This law introduces vital institutional actors, outlines diverse frameworks for conducting railway operations, places strong emphasis on safety, security, and environmental preservation, and sets up effective dispute resolution mechanisms. Through the promotion of competition and responsible management of railway assets, this legislation aims to rejuvenate and expand Cameroon's railway sector, holding the promise of enhanced transportation services and increased economic prospects in the coming years.

By Jacob Akuo, Esq.

Partner Dayspring Law Firm

LLM University of Essex

LLM, Université catholique de Lyon

Master 2, Université Lumière Lyon 2