Water and electricity rates may now go up, following today’s increase in the price of petroleum derivatives, authorized by Cape Verde’s Economic Regulation Agency (ARE). ARE administrative council president Renato Lima admitted that “this is a possibility, and ARE will make a pronouncement on the issue at the end of the month.”

Public transportation prices will not, however, be increased again this year, as fee hikes in the sector take place on an annual basis, and those corresponding to 2008 occurred only weeks ago. “Only next year will companies be compensated for the evolution in prices in 2008,” said Lima.

Renato Lima explained in a press conference yesterday that the international financial landscape is affecting prices in Cape Verde. “Investors have transferred money in massive volume from the capital market to what is technically known as ‘petroleum futures,’ which has increased the speculative component of prices.”

“Aggravating this,” he continued, “is the increasing costliness of transportation and insurance associated with the level of risk caused by current geo-political tensions. And it is unlikely that petroleum prices will fall back below the 100 dollar-a-barrel level.” Making matters worse, “petroleum derivates are the main source of energy in Cape Verde, which imports 100% of its needs in the area. In 2007 the country imported more than 6 billion escudos in petroleum derivatives, after which it reduced its re-exportation quota as a result of the changes in South African Airways’ flight routes.”

The new price alterations in Cape Verde are based on norms establishing that any variation of more than 2% in petroleum derivative prices on the international market be reflected in the domestic market.

Among the various petroleum derivates that saw their prices altered, the price of diesel oil used in the production of electricity rose 10.49%.

Source: A Semana