ERHC Energy Inc (ERHE)

[RubyMartin]

US$5 million shortfall puts Sao Tome fuel company on brink of bankruptcy [ 2006-09-29 ]


Lisbon, Portugal, 29 Sept – Sao Tome and Principe’s state fuel company, ENCO is on the brink of bankruptcy as in August it had an operating shortfall of around US$5 million, which made it impossible to pay its suppliers.

The deficit ahs been steadily increasing this year due to fuel oil price rises, which ENCo has not been passed on by ENCO to its customers as prices are set through negotiations with the government, Sao Tome’s state television (TVS) reported, citing sources close to the company.

This situation is worsened by the depreciation of the Sao Tome currency, which is affecting the country’s immediate commitments and accumulated debts, which have left ENCO with difficulties in paying taxes and suppliers.

If the situation continues, the company, the only one of its kind on the archipelago, could be in danger of bringing its operations to an end.

ENCO is also faced with the problem of receiving debts owed by its retailers, which are currently valued at US$2 million.

Recently, ENCO stopped providing credit to EMAE, the public water and power company due to an accumulated debt EMAE says it is unable to pay. (macauhub)