Brief Overview of Infrastructure Delivery

Brief Overview of Infrastructure Delivery

Energy, Electricity and Water, and Sanitation

8. 
   Cape Verde’s petroleum market is dominated by a duopoly. There are two companies: Enacol (major shareholders are Petrogal and Sonangol; the State has a participation of 2.1 percent) and Shell (a wholly owned subsidiary of Shell International). The two companies import, store, and distribute petroleum products. Concerns with the transparency of the pricing of oil products have been raised: by Booz, Allen and Hamilton (2002) and PER (FY06).⁶⁷ Furthermore, price formulation by the regulator allowed for differing mark-ups among companies, thus discouraging competition and efficiency. Other flaws in this market include high costs for import, storage, and distribution.⁶⁸ To circumvent, or at least minimize these, the government is setting up a logistics company that will import, store, and distribute; and the regulator is working on a revised (more transparent) formula for price-setting.⁶⁹
   
9. 
   The water and electricity company (ELECTRA) is the incumbent operator for electricity. It supplies electricity to the whole country and water to the islands of Sao Vicente, Sal, Boavista, and the city of Praia. Municipalities provide water to the remaining islands and cities of Santiago Island. In 1999 ELECTRA became a public-private partnership through the sale of 51 percent of the share value of the production assets of electricity and water. The government maintained 34 percent of the share value, and the municipalities retained 15 percent. In July 2006, as a result of a series of failed negotiations between the private stakeholders and the government, the State regained the position of major shareholder (51 percent) in May 2008. Private stakeholders retained 34 percent; the municipalities retained 15 percent.
   
10. 
    During 2001–06, production and connections grew rapidly, while installed capacity decreased. Between 2002 and 2006, installed capacity decreased approximately 4.4 percent. As a result, blackouts were more frequent in duration and quantity. During this period, energy losses remained unchanged. Energy production is largely dependent on diesel plants––very costly for a country dependent on oil. The authorities are planning to replace the gas oil generation by fuel oil generation plants (roughly, the price of gas oil––diesel––is double the cost of fuel oil, FO380) and to invest in renewable energy to improve technical efficiency and reduce oil dependency.⁷⁰
    

11. 
    Tariffs for electricity and water⁷¹ in Cape Verde are among the highest for African countries (figure 1.2). According to the Investment Climate Survey (2006), firms in Cape Verde perceive the poor performance of the power sector as the greatest constraint on their operations and growth.⁷² Over 60 percent of firms say that the power sector is a major or very severe obstacle to operate and grow. Furthermore, the number of power outages and losses due to power outages in Cape Verde are high compared with its peers.