Cape Verde electricity company should be managed “in commercial terms,” IMF warns

15 November 2006

Washington, United States, 15 Nov – Cape Verde’s electricity company must be managed in commercial terms with the price of fuel being automatically reflected in tariffs, the International Monetary Fund (IMF) warned Tuesday.

In a statement issued Tuesday in Washington to publish the conclusions of a visit to Cape Verde, the IMF said it supported the efforts of the government of the archipelago to manage Electra in commercial terms in order for much-needed investments to be made to improve the company’s efficiency.

For that purpose, the IMF recommended the implementation of automatic mechanisms to adjust electricity and water tariffs based on cost and to pass them on to the consumer.

Since October the Cape Verde state has, once again, become the majority shareholder of Empresa Pública de Electricidade e Água de Cabo Verde (Electra) as part of the restructuring of the company.

“With foreign direct investment and tourism revenues rising significantly and with good agricultural prospects, after the rains, projections for GDP growth were raised to almost 6 percent, in 2006 and 6.5 percent in 2007,” the statement said.

The IMF also noted that cash reserves “increased greatly,” which reflects a “prudent” monetary and fiscal policy as well as, “the success of Cape Verde in attracting increasing official help and foreign private investment.” (macauhub)