Ivory Coast President Alassane Ouattara’s plan to open up the West African nation’s power and water distribution to competition is “unlikely” to happen in the short term, according to Eurasia Group.
Ouattara said on May 1 that monopolies in the power and water sectors must come to an end to bring prices down. The national electricity utility Cie Ivoirienne d’Electricite, or CIE, is a unit of Eranove SA, which also owns a stake in the country’s water distributor, Societe de Distribution d’Eau de la Cote d’Ivoire, or SODECI.
“Renegotiations of contracts with Eranove would set a negative precedent and undermine the administration’s credibility,” Eurasia Group said in an e-mailed note on Wednesday. “It is more likely that Ouattara will try to repair relations with Eranove and come to a mutually beneficial agreement.”
Eranove, which is 56 percent owned by private-equity firm Emerging Capital Partners and 19 percent by Paris-based Axa SA, holds the electricity concession until 2020.
Ouattara’s decision to annul a recent 5 percent rise in electricity prices means that “the government will not meet its plans to make tariffs cost-reflective by 2016,” making it more difficult to attract investment, Eurasia said. The government will probably not allow any price increases before elections set for November, it said.
The government of the world’s biggest cocoa producer decided last year to increase electricity prices by 16 percent over three years in order to cut subsidies to the power sector and increase electricity production. Electricity subsidies will amount to as much as $35 million this year, according to Eurasia.