Cape Verde
Protests against Cape Verdean price hikes

afrol News, 17 January - Protest is growing over the sudden large increases in energy, water and public transport prices in Cape Verde. While the political opposition demands an explanation from Prime Minister José Maria Neves, consumer organisations speak of "price speculations". Market regulating agencies that were to protect consumers from the privatised public utilities had not been implemented.

The Movement for Democracy (MpD), Cape Verde's main opposition party, this week demanded that Prime Minister Neves appeared in Parliament to explain the recent price hikes and the national budget for 2003. The MpD held Mr Neves "responsible for the deregulation of the market, the increased costs of living for Cape Verdean families, the bankruptcy of economic activities and the competition conditions for the companies and the country," according to Ulisses Correia e Silva, Vice President of the opposition party.

The prices for water, electricity and public transports paid by the Cape Verdean consumer all experienced a hike on 1 January 2003. In the case of water for domestic consumption, the tariffs were raised from 190 to 200 Cape Verdean escudos, whereas in the case of low voltage electricity, the price was raised from 14 to 16 Cape Verdean escudos. Nevertheless, the most significant price hike took place in the public transports sector, where the price increases was set at 37.5 percent.

This was immediately protested by trade unions, describing the situation as "inhumane, arrogant and boastful." The unions last week called on the government to take "those measures necessary" in view to sensitise the companies of public transports, water and electricity. After privatising most parastatal companies during the last five years, the government mostly had remained passive regarding the pricing policies of the new, private operators. 

Earlier this week, the unions were followed by the Association for the Defence of Cape Verdean Consumers (ADECO). Alcides Graça, President of the association, complained that the Market Regulation Association (ARM) had been dismantled before it came into function and demanded its "urgent and necessary" reestablishment. 

The ARM and other institutions of price and market control were created towards end of 1998 as Cape Verde started on its wave of privatisation. These institutions were to protect Cape Verdean consumers against socially dangerous price hikes, but, according to Mr Graça, never really got to function in an effective way. They were abolished in October last year and are to be substituted by another institution within the future.

According to Mr Graça, the establishment of these institutions are, at the moment, of extreme importance for Cape Verde, as "we have noted successive increases in several main sectors of Cape Verde's economy." Not only the recent price hikes made their establishment necessary, but also the need for better quality controls. 

The ADECO President on Cape Verdean radio expressed his "grave concerns" that under the current situation, those responsible of the price hikes could "take advantage of the situation and speculate in it." It would always be the consumer who had to pay the price for this, Mr Graça emphasised.

Also the trade union hints at possible speculations by the private operators behind the transport, water and electricity services. The unions complain that these private operators lack the necessary competition and government regulatory agencies to offer affordable prices to Cape Verdean consumers. The privately owned public transport company, 'Moura Company', now practically has a monopoly on collective road transports in the Cape Verdean capital, Praia, after the old state-owned transport company - 'Transcor' - disappeared a few years ago. 

Elektra SARL, the country's main electricity and water supplier, has a similar position of supply monopoly in Praia and on the archipelago's main islands; Sal, São Vicente and São Antão. Three years ago, 51 percent of Elektra was sold to a Portuguese consortium made up of Electricidade de Portugal and IPE-Águas de Portugal. Water and electricity tariffs have steadily climbed since Elektra was popped up for privatisation in the late 1990s. 

The price hikes in these privatised companies now also is becoming a political issue in Cape Verde. Mr Correia e Silva of the MpD says the water and electricity price hike does not only affect poor Cape Verdean households, but also the country's entire private sector economy and the national competitiveness. These "tendentious and speculative" price increases by monopoly companies had also included a 15 percent hike on obligatory car insurances, Mr Correia e Silva complained. 

The protests from the party's leadership are mirrored in its constituencies. MdP parliamentarian José Luís Lima Santos from the island of Boa-Vista yesterday reported from a trip home that the situation on the island was depressing. Especially public transport and energy supply was both too expensive and too poorly organised. "People have had to return to the traditional oil lamps," Mr Lima reported from Boa-Vista. Elektra was not doing the job it had promised.

The smaller opposition Party of Democratic Renewal (PRD) also has joined the critiques against the government. According to a PRD statement, "the constants and abrupt price increases have their origin in a lack of clear policies by the government, which in fact bases on a position of manipulation and disorientation."

The government has yet to answer on the massive critique from civil society and the opposition regarding the price hikes. At a cabinet meeting last week, however, Arnaldo Andrade, the Minister of the Presidency, commented on the increased prices on products derived from petroleum. Mr Andrade said Cape Verde was a functioning liberal market economy, "where prices vary according to demand." Small price variations had to be accepted, he pointed out.