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Cape Verde: Rebooting a national electricity company

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Cape Verde officials chooses CPCS to restructure and transfer the national electricity utility to the private sector.  

The Challenge

Despite contributing to an above-average electrification rate of 95% in Cape Verde, the state-owned electricity company Electra hasn’t been as profitable as expected. The government wishes to reboot the company to take advantage of the country’s immense potential in renewable energy.

As such, the government decided to unbundle Electra into three separate companies responsible for electricity generation, distribution and transmission. The first two companies will be handed over to private investors while the third one will remain state-owned.

“It falls to us to advise the government in this transaction process, says Admar Brito, transaction advisory expert at CPCS. Restructuring and privatizing the company is the only way to ensure its long-term financial viability.”

What we did  

CPCS plans to assist the government in two volleys.

The first phase consists of coming up with privatization options and restructuring analyses. This includes writing proposals to draw private investors, resolving restructuring complications and conducting due diligence on legal and environmental aspects.

The second phase entails implementing a privatization program. CPCS will launch a promotional campaign to attract bids from the private sector for the generation and distribution companies, oversee the bidding process and help the government negotiate with the selected bidders.  

Impact 

Electra’s successful transfer and restructuring should help it secure capital. This in turn encourages foreign direct investment into the sector, which increases industry efficiency. Efficient electricity in Cape Verde is crucial to the tourism industry, the main driver of the national economy.