Cape Verde
Privatised Cape Verdean utility doesn't care about promises

afrol News, 4 February - The glory days of privatisation in Cape Verde seem to be over as disappointments are getting commonplace. While water and electricity bills for those affording the service have increased substantially, municipalities complain the privatised utility doesn't care about promises made to extend its services.

Electra is the former state-owned water and electricity utility in Cape Verde. According to the National Asociasión of Cape Verdean Municiplaities (ANMCV), Electra has become "non-transparent" and "incalculable" after being privatised. Extension projects are not being executed and the municipalities have become heavily indebted to produce the increased access to water and electricity that was supposed to be Electra's business.

ANMCV says Electra has caused "enormous transformations" in municipal economy in Cape Verde. While the company is hard-headed in demanding timely payment for its water and electricity services, little is seen of tax payments from Electra, nor to mention the rent for municipal ground where Electra has its installations.

The municipalities - which are co-owners of Electra - also question the company's investment policy. Electra had been bound to invest in the extension of the water and electricity distribution all over the archipelago as it got its concession renewed last year. A construction plan was elaborated in accordance with the municipalities and approved by the government.

According to ANMCV, however, this plan has not bee implemented by Electra. In addition to minor investment in rich neighbourhoods able to pay for supply, "the only investments after the privatisation have been executed by the municipalities themselves, which have had to borrow funds from banks to be able to defend their honour regarding the promises given to the population."

Electra further has been heavily criticised earlier this year for a sudden price hike on its services after 1 January. Together with the privatised public transport company, Electra has caused major extra costs for Cape Verdean consumers this year, and there are no alternative to these companies' services in Cape Verde.

The Association for the Defence of Cape Verdean Consumers (ADECO) in January urged the government to establish a market regulation institution, controlling prices and quality, as it had been promised as large-scale privatisation was introduced in the late 1990s. Alcides Graça, President of the association, says this "establishment is necessary," not only because of the recent price hikes from the monopoly companies, but also to assure they deliver a product with a minimum quality.

Electra in practical terms has a monopoly on the supply of water and electricity to the capital, Praia, and those islands where these services exist. Three years ago, 51 percent of the shares of the state company were sold to a Portuguese consortium, and water and electricity prices have increased ever since.

To safeguard its revenues, Electra also has started to cut water and electricity supply to customers unable to pay for services, making supply less and less accessible to the poor majority of the archipelago. This policy is part of the IMF recipe of "full cost recovery" for ex-subsidised state utilities.

The Cape Verdean opposition has strongly criticised the price hikes on water, electricity and public transport earlier this year, claiming they are hurting Cape Verdean businesses as well as consumers. The main opposition party however itself implemented the privatisation of Electra when it held power.