Even though production costs vary significantly across islands, prices are the same across the country. The decentralized structure of electricity production leads to differences in the production costs across islands (caused by differences in the inputs used and the scale of generators). However, prices are the same owing to a cross-subsidization among islands on the grounds of the principles of equity and social justice. Demand also varies significantly across islands. Moreover, due to the overall small size of the system, demand is very skewed. One large individual firm (hotel) can drive up substantially the demand needs in a specific island. As a result, if one large firm (hotel) builds its own generator, the impact on the economies of scale, and thus efficiency gains, is very high. Prices of electricity, water, and petroleum products are established by the regulator, Agencia de Regulação Economica (ARE).
Water production and access (connections) increased in the recent years.In total, from 2001 to 2006, connections increased approximately 50 percent. The increase in connections has contributed to raise the percentage of population with access to improved water sources to 80 percent (World Bank Indicators 2006). However, the increase of production and connections was accompanied by an increase in network losses.73As with electricity, prices are the same across all islands, regardless of the provider, ELECTRA, or municipalities.
Table 5.38: Water Supply in Cape Verde
Overall sanitation services increased only from 41 percent in 2000 to 43 percent in 2004 (World Bank Indicators). Cape Verde’s percentage of population with improved sanitation facilities is higher than Sub-Saharan Africa’s (36.5 percent), but lower than those of Senegal (57 percent) and all the other comparator countries (Table 5 .35). The difference between the rural and urban is very acute. Approximately three times more population in the urban areas has access to improved sanitation facilities. These indicators are expected to have improved in the recent past due to the recent investments in treatment plants and solid waste treatments.
